Theory:

     And now, the time had come. Three big newspapers, some under his coat and some over his legs, had not kept him warm during the night in the park.
 
     So Soapy was thinking of the Island. There were places in the city where he could go and ask for food and a bed. These would be given to him. He could move from one building to another, and he would be taken care of through the winter. But he liked Blackwell’s Island better.
 
     Soapy’s spirit was proud. If he went to any of these places, there were certain things he had to do. In one way or another, he would have to pay for what they gave him. They would not ask him for money. But they would make him wash his whole body. They would make him answer questions. They would want to know everything about his life.
 
     No. Prison was better than that. The prison had rules that he would have to follow. But in prison, a gentleman’s own life was still his own life.
 
     Soapy, having decided to go to the Island, at once began to move towards his desire.
Explanation:
 
Soapy knew that the time had arrived for leaving the park because, on the previous night, Soapy felt very cold while lying on the bench. So he placed three newspapers underneath his coat, beneath his ankles, and over his legs to remain warm. The idea, however, did not go as planned. The newspapers did not keep him warm during the night in the park. The chillness made him think of Blackwell's island because he would get a bed and nice sleep if he were there.
 
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The newspaper did not keep Soapy warm

Soapy was aware that the city had certain facilities (charities) for helping homeless individuals. If he went there, they would feed him, give him a bed, and look after him for the rest of the winter. But, above all, Soapy preferred to remain in prison because he felt very comfortable in prison when compared to other places.
 
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Charities for homeless people

Soapy was proud of himself because if he stayed at any of the places, such as charities, he had to pay for it somehow. Paying, in the sense, was not in the form of money, but rather in obeying the charity people's directions. Soapy had to respond to the questions posted by the individuals who had sheltered him, and he was occasionally questioned about his personal life as well. Soapy, on the other hand, was not fond of accepting help. According to Soapy, those who give charity, have the right to intrude on one's privacy. People might support him out of pity at first, and later, they would be highly interested in learning about someone's personal life. Soapy ultimately realised that no place would be better than Blackwell's prison after forecasting everything in his mind.
 
Soapy, on the other hand, preferred to be a "guest" in prison. The cops never get involved in the private lives of "guests" like Soapy. The prison had a few rules, and Soapy had to follow that. He thought that his dignity could be preserved only in jail. He wanted to restore his freedom by being in prison. Therefore, Soapy decided to do something annoying to get himself arrested by the cops.
 
Meanings of the difficult words:
 
S.No
Words
Meanings
1
Annoying Causing irritation or make someone angry
2
DesireA strong feeling of wanting to have something or wishing for something to happen
3
Charity An organisation set up to provide help and raise money for those in need
4
Intrude Put oneself deliberately into a place or situation where one is unwelcome or uninvited
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.