Summary
John Openshaw visits Holmes to ask for help about a certain mysterious and threatening kind of letter both his uncle and father had received just before their deaths. His uncle, Elias, had emigrated to America in his youth and became a planter in Florida. Since returning, he had taken part in raising John.
One day, when he received a letter with nothing but five orange pips in the envelope and the letters "K. K. K." written on the inside flap, he burned a box of papers and made his will to Joseph, his brother, and John's father. Shortly after, he was found dead in what appeared to be an accident; a similar incident befell Joseph, who received a letter and then died under suspicious circumstances.
Holmes advises John, who has himself just received the foreboding pips, to offer up the box of documents. However, the next day John is discovered dead. Holmes deduces that it is the Ku Klux Klan and that the ringleader of the murders has been traveling around on a ship; after determining the identity of the vessel that this James Calhoun has left London on, Holmes sends a letter of his own to the authorities there to encourage Calhoun's arrest.
The story ends in mystery though, as the ship sinks in mysterious circumstances.
Analysis
American readers will certainly feel a measure of dramatic irony regarding the meaning of the acronym KKK, which Watson is not familiar with; the specific, strange detail (there is always one in each Holmes story) of the orange pips may not be as well known. Regardless, the presumed ignorance on the side of the British reader allows for a bit of historical exposition in the form of Watson reading from the "American Encyclopedia." This quasi-journalistic insertion into the story allows for a connection between politics outside of the British Empire and the cases that fall under Holmes' purview.
This story is also remarkable for the frequency with which it plays with acronyms, beginning of course with KKK but also, as Holmes adapts in a kind of tit-for-tat or parody against the Americans, "S.H. for J.O.," that is "Sherlock Holmes for John Openshaw" and the ship Calhoun is travelling on, the Lone Star, which sinks and leaves only a stern-post with the letters "L.S." As in so many Holmes stories, the core of mysteries is the determination of identity, and identity, most often tied to a specific name, can be hinted at, but also obscured by, initials.