Explain why the reply from Red Chief’s father is an example of irony. From "The Ransom of Red Chief" by O. Henry.

The reply from Red Chief's father to the ransom demand is doubly ironic. First, it is ironic because the two kidnappers were expecting to be paid to release Johnny to his father and instead his father demanded payment of $250 to take the little hellcat back. What is also ironic in this situation is that the father's reply comes after Sam and Bill have had all kinds of trouble dealing with Red Chief and so they are not particularly surprised or indignant when they receive the father's letter. Instead, they both consider the father's counter-proposition pretty reasonable, considering the problems they have been having with his son.

The father's letter is interesting in its formal tone and its understatement.

Gentlemen: I received your letter to-day by post, in regard to the ransom you ask for the return of my son. I think you are a little high in your demands, and I hereby make you a counter-proposition, which I am inclined to believe you will accept. You bring Johnny home and pay me two hundred and fifty dollars in cash, and I agree to take him off your hands. You had better come at night, for the neighbours believe he is lost, and I couldn't be responsible for what they would do to anybody they saw bringing him back.

Very respectfully,
EBENEZER DORSET.

Mr. Dorset does not say anything about his son's typically wild behavior. But he suggests that the neighbors might react with violence against anyone who brought little Johnny back. He does not seem the least bit anxious to have the boy returned. 

The father's letter is ironic, both because of his counter-proposition and because the two kidnappers immediately take it seriously. They regard the polite letter as fair and reasonable. Their own letter demanding $1500 in ransom suddenly seems wildly unreasonable. They return the boy without considering attempting any further negotiation. 

The story is a good example of situational irony, which is defined as an incongruity between what is expected and what actually occurs. As Sam says at the beginning of the story:

It looked like a good thing: but wait till I tell you.