Doyle knew the Mafia existed and it was Italian in nature, but that is all he had right. The Mafia is the criminal group in Sicily, while Sicily is part of Italy the Mafia is Sicilian based, many other sections of Italy has their own similar criminal organization but the Mafia is the best know (and probably the best organized). Capone was NOT a Sciliano and as such could NOT lead the Mafia, that was left to his best friend, who as a Sciliano could head the Mafia. Modern Organized crime started with the Mafia, but soon after arriving in the US expanded beyond the Scilano ethnic group, but the Mafia always stayed under the control of the Scilano ethnic group (For example the Mafia was the backbone of the crime syndicate organized by Charlie "Lucky" Luciano of New York. Luciano was a Sciliano and thus could be the head of the Mafia, but his best friend, and who many considered the brain behind organized crime of the 1930s till the 1960s, Meyer Lansky, was a Jew).
More on Luckly Luciano:
http://en.wikipedia.org/wiki/Lucky_LucianoMeyer Lansky:
http://en.wikipedia.org/wiki/Meyer_LanskyThe formation of the Mafia in Sicily is unclear, for it appears to begin as a local resistance group against what the people of Sicily viewed as foreign occupiers. Some indications this started during the Arab occupation in the late 700s, but seems to die out with the return of Byzantine rule later on in the same century, to resume when the Normans kicked out the Byzantines around 1000 AD. The subsequent rule of Sicily, but the Norman, then the Holy Roman Emperors, then the Kingdom of Two Sicilies (Whose ruler was from Spain and later France) seems to foster the resistance groups. The problem with such resistance group is how to raise money.
Side Note: Such conversion of a resistance group into a criminal group is common among UNSUCCESSFUL resistance groups. This is even seen in today's society, for example the Irish Republican Army of the 1970s entered into criminal activity to pay for it war on the British. As the fight for rights of the Catholics in Northern Ireland petered out in the 1980s, the people who had entered into criminal activities to pay for the fight, rather then give up the steady flow of cash they had become use to receiving, they just stayed in the criminal "market place", and are now the main source of organized crime in Ireland and Britain. Notice the IRA started out as a resistance Group, but after a while the need to raise money for the resistance, which included illegal activities, evolved into being a primary a criminal organization. Notice this is the result of the members of the resistance group NOT be aloud back into society, after being defeated by the people they are fighting against when such people give into the demand of the people the resistance group is fighting for. In many such conflicts, the people in power, rather then leave such resistance members outside society, pardon them (or the resistance group take over, so no pardon is needed). In the case of the IRA, no general pardon was given NOR did the resistance fighters get anything for the fighting the good fight. As such they return to what they know, criminal activities. This appears to have also happen to the Mafia, a resistance group, that after winning rights for the people they were fighting for (The people of Sicily) found themselves still outside of Society and the only thing they knew to earn a living was criminal activities, and thus became a very tight knit criminal organization do to its resistance roots.
Anyway, back to the Mafia, the above seems to explain many of the aspects of the Mafia that made it such a hard thing to destroy. It was easier to destroy organized crime then to destroy something like the Mafia with its rigid recruitment standards (Which goes back to the days it was a successful resistance group). Doyle missed this whole concept for he knew of the name and assumed it was a regular criminal organization (one that is easily destroyed for the members are looking out for themselves NOT some larger ideal). Doyle knew it was Italian in nature, but not that it was Sicily only group. Just a comment on the Doyle and Sherlock Holmes, Doyle makes some good points in the stories even with his mistakes such as on the Mafia and the Mormans.
More on the Mafia:
http://en.wikipedia.org/wiki/Cosa_NostraSicily was ruled by Byzantine till 825, when the Moors from Carthage first attacked. It took the Moors to 925 to take over the entire island. The Normans took Sicily starting 135 years later (1060) with the last Moors removed by 1091 (surprising the language of the Island appears to be Greek when the Norman took over Sicily only becoming Latin and Italian as the Norman rule continued, thus showing how weak the hold the Moors had over Sicily during the rule of the Moors). Norman rule lasted to 1191, when the Holy Roman Emperor took Sicily over. The French moved in in 1262, and then the Spainish in 1282, dividing the Island between Spain and France, a situation that was to last for the next 90 years in violent clashes. By 1302 the island of Sicily was its own kingdon, under a relative of the King of Aragon (Part of modern day Spain). In 1409 the Island of Sicily became part of the King of Aragon, in 1458 the rule of Sicily was again ruled by relatives of the King of Aragon till 1494, when the rule of Sicily returned to the King of Aragon (King Ferdinand, married Isabella of Castile to form Modern Spain in 1469, thus Sicily became the property of the Rulers of Spain in 1494 when it returned to the King of Aragon).
Side note- Aragon was Ferdinand's Kingdom, Isabella ruled Castile and Leon sections of Modern Spain. Thus technically Sicily was ruled by Ferdinand NOT Isabella. In fact all four sections of Spain was ruled by both.
From 1494 till 1713 Sicily was ruled by Spain. From 1713 till 1718 The northern Italian Kingdom of Savoy would rule Sicily, but the Spanish would take it back in 1718 and turned it over to Austria in 1720. In 1735 Spain would again take Sicily and put a relative of the King of Spain and France as its ruler. This would last till 1799 when Napoleon would king the Kingdom of Sicily and make the area a republic, which lasted less then six months and became part of the Kingdom of Two Sicilies (Sicily and Naples were the two parts). Various reforms were done in this period, but reforms that were reversed with the Defeat of Napoleon in 1815.
Sicily remained independent till 1861 when it was forcefully merged with the rest of Italy, many residents of Sicily calls the merger an conquest of Sicily by Northern Italy.
Thus you have a long tradition of foreign rule of Sicily, including rule by the rest of Italy. While there is no independent movement in Sicily today, it appears to have existed in small numbers in the post WWII period. Resistance to the rule of Northern Italy also appears to occur with the acknowledge rise of the Mafia. Other resistance movements that could have lead to the creation of the mafia, include the "Reforms" under Napoleon and the repeal of those "reforms" and the reinstatement of those "reforms" after 1848. Remember people who are HARMED by change are the most resistant to such change, and the people who benefit from such change give such change little support UNLESS the economic benefit is quickly seen (And most cases it is NOT, people see other people hurt by the Change and the people who most support the change making out like thieves, even if the reforms are in the long term good). Thus you have several situation where a resistance group could have arose and then become the modern Mafia after the resistance ends up failing (Either do to complete defeat of the resistance, OR the opposition to the resistance undermine the support for the resistance by ending what cause the people to support the resistance).
Just a comment on the Mafia and why it has lasted so long.