Theory:

     “I—” said the umbrella man “— that is — you know how these things happen; if that’s your umbrella, I’m very sorry. I found it this morning in a restaurant. If you say it’s yours I hope you’ll—”
 
     “It’s mine!” cried Soapy, with anger in his voice.

     The umbrella man hurried away. The cop helped a lady across the street. Soapy walked east. He threw the umbrella as far as he could throw it. He talked to himself about cops and what he thought of them. Because he wished to be arrested, they seemed to believe he was like a king who could do no wrong.
Explanation:
 
The umbrella man swiftly disclosed his truth to Soapy when a police officer observed the argument. He explained that he had found the umbrella in a restaurant earlier in the morning. He also stated that he was not the owner of the umbrella. The umbrella man said to Soapy, “If you say it’s yours, I hope you’ll—” On hearing that, Soapy exploded in anger and said that the umbrella was his. Soapy never expected the man would tell him it wasn’t his umbrella. Soapy’s main intention was that the umbrella owner would argue with him to finalise it was his umbrella. However, things became twisted, and the man told him he had got it from somewhere. At last, Soapy felt lost and dejected. His fifth strategy also got failed.

When Soapy shouted in anger, the umbrella man left the place. The police stopped staring at both of them when the argument was done. Later, the policeman helped a woman in crossing the street. Then, Soapy started walking towards the east. Finally, due to anger, Soapy threw the umbrella away as far as he could because whatever plan he had thought had just failed.
 
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Soapy threw the umbrella away

While walking, Soapy talked to himself about the cops and the things he thought of cops. Soapy thought that the cops would arrest him if he did any wrong. He wished to be captured by the cops several times. But here, the cops seemed to believe Soapy was like a king who would not commit any wrong. Soapy became increasingly desperate and furious over his concurrent failed attempts.
 
Meanings of the difficult words:
 
S.No
Words
Meanings
1
DejectedSad and depressed
2
Disclosed Make secret or new information known
3
Observed Watch someone or something carefully and attentively
4
ArgumentAn exchange of diverging or opposite views, typically a heated or angry one
Reference:
National Council of Educational Research and Training (2007). An Alien Hand. The Cop and the Anthem- O. Henry(20-29). Published at the Publication Division by the Secretary, National Council of Educational Research and Training, Sri Aurobindo Marg, New Delhi.