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OK, I am “assssuming that white lead goes into the plug connector on the side of the engine…I am also “guessing” that the mercury switch is disconnected probably because it is broken, so no ground was getting up the the solenoid….Someone probably just tapped into a ground from the junction box (that you don’t have) and connected it to the solenoid….
The engine will start and run without the mercury switch, BUT it will be able to crank with the throttle advanced all the way, and that could be dangerous. The engine might not shut off when the key switch is turned off also… It is hard for me to say without being there and seeing the actual wiring…
The engine might “run away” if revved up in neutral also, but you can always stop it by turning the choke on….