Theory, Baker Street Irregulars and a confession
Holmes has a theory
Holmes and Watson follow Toby as he tracks the creosote scent. Holmes explains his theory about the missing treasure and the murders as they go. He deduces that the wooden legged man must be Jonathan Small and that the thorn has been fired by an accomplice. The dog brings them to a house advertising 'Boats for Hire'. Holmes learns from Mrs Smith that her husband, Mordecai, owns a fast boat (or launch) called the Aurora which he has hired to a wooden-legged man. Both men and the boat are missing.
The Baker Street Irregulars
Holmes employs Wiggins and the Baker Street Irregulars, a group of young boys, to search for the Aurora. When they are unsuccessful, Holmes goes out disguised as a sailor and finds the boat in a yard.
Chasing the Aurora
Mr Athelney Jones arranges for a police boat to collect him, Watson and Holmes that night. When the Aurora launches onto the River Thames, the police boat gives chase. They approach the boat and Small's accomplice, Tonga, lifts his hand to fire a dart. Holmes and Watson both shoot at him and he falls into the river. Jonathan Small's wooden leg gets stuck in the mud and he is easily caught.
Jonathan Small confesses
Small confesses his story of meeting Mahomet Singh and Abdullah Khan in India. He explains how they promised him a share of treasure if he would help them to murder the merchant, Achmet. The sign of the four represented their oath along with Dost Akbar to share Achmet's treasure. However, the men were arrested for the murder of Achmet and Small was sent to the Andaman Islands to serve his sentence. In an attempt to free the treasure, Small told Major Sholto and Captain Morstan where it was hidden, promising them a fifth share. Sholto did not keep his word however, and stole the treasure.
Eventually, Small escaped and tracked down Sholto and the treasure, proving Holmes鈥 theory to be accurate.