Our first glimpse of Sherlock Holmes and Dr. Watson is in their home office at 221b Baker Street in London. Watson examines a mysterious cane left in the office by an unknown visitor, and Holmes sits with his back facing his friend. Holmes asks Watson what he makes of it, and Watson declares that his friend must "have eyes in the back of [his] head," since he saw what he was doing. Holmes admits that he saw Watson's reflection in the coffee service, proving to Watson and us that he is an astute observer.
Watson offers up his theory as to the origin of the walking stick, declaring that the inscription, "To James Mortimer, M.R.C.S., from his friends of the C.C.H.," suggests an elderly doctor who was awarded the object after years of faithful service. Holmes encourages Watson's speculation, and the doctor continues, saying that the well-worn stick implies a country practitioner who walks about quite a bit. In addition, the C.C.H., he suggests, is probably the mark of "the something hunt," a local group to whom Mortimer provided some service.
Holmes congratulates Watson, and goes on to examine the cane himself as Watson basks in the glory of Holmes' compliment. However, Holmes quickly contradicts almost all of Watson's conclusions. Holmes suggests that while the owner is clearly a country practitioner, C.C.H. actually means Charing Cross Hospital. The cane was probably presented on the occasion of the man's retirement from the hospital, and only a young man would have retired from a successful city practice to move to a rural one. Holmes goes on to suggest that the man must possess a small spaniel, given the bite marks on the cane, and, he playfully announces, given the appearance of master and dog at their front door.
Mortimer arrives, introduces himself, and talks to the embarrassed Watson. An ardent phrenologist, Mortimer admires Holmes' skull and announces his desire to consult with "the second highest expert in Europe," a moniker which Holmes disputes.