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When you turn the key to the start position (or push the start button), 12V is sent to one of the small terminals on this starter solenoid. From there it goes through the pull-in”coil within the solenoid and out through this other small solenoid terminal. But nothing happens yet because the it has not reached ground and there is no current flow. through the pull-in coil.
So, going on from there it is presented to the pin on the mercury switch.. The mercury switch is a little metal bottle with a cork in one end and the pin sticking through the cork. There is a drop of liquid mercury in this bottle. When the bottle is tilted one way the drop of mercury runs back into the bottle and nothing happens.. But tilt it the other way and the drop of mercury runs back to the corked end and connects the the pin to the metal shell of the bottle.. This connects the bottle to its mounting tab grounding it to the motor and current flows and the pull-in coil becomes magnetic and closes the heavy duty contacts to run the starter.
The other wire merely ensures a good solid connection between the mounting tab and the restating throttle gear.