“A Retrieved Reformation” is set in Indiana and Arkansas in the early 1900s. The story takes a critical look at the criminal justice system in the U.S. in the early 20th century, likely as a result of O. Henry’s time in prison as well the Prison Reform Movement that, during the Progressive Era, was raising questions about the role of prisons in American life.
Rather than presenting the detective (Price) in the story as “good” and the criminal (Jimmy) as “bad,” O. Henry depicts both of them as complex characters who are willing to break the law at times in order for true justice to be served. For example, both Jimmy and Price end up deciding that Jimmy living his life as the law-abiding shoemaker Ralph Steadman is an effective replacement for being imprisoned for his crimes. After all, if the purpose of prison is rehabilitation and preventing recidivism (committing another crime after having already served time), then Jimmy doesn’t need to go back, as he has already been rehabilitated and redeemed by falling in love with Annabel and living a “straight” life with her.
In addition to questioning the U.S. prison system’s ability to truly rehabilitate criminals, O. Henry also hints at the political corruption embedded in the system in the early 20th century, as seen in the following passage:
[Jimmy] had served nearly ten months of a four-year sentence. He had expected to stay only about three months, at the longest. When a man with as many friends on the outside as Jimmy Valentine had is received in the “stir” it is hardly worth while to cut his hair.
Here, O. Henry highlights how people involved with organized crime (like Jimmy) who have “many friends on the outside” tended to be pardoned early because of their connections with politicians. Later in the story, Mike (another member of Jimmy's organized crime syndicate) apologizes to Jimmy for not getting him out sooner than 10 months and says that it was due to the governor dragging his heels. Clearly, criminals like Mike and Jimmy have a lot of sway in politics. This aspect of the setting reflects the reality of organized crime in the U.S. during this time.
