Your interpretation seems correct to me. A piece of paper was pierced near one corner, a thread passed through the hole and tied to finger and thumb of one hand, so that the paper could be suspended in the air without touching the hand.
Suspending a piece of paper in this way leaves it free to move according to air currents, and presumably the idea was to attempt to detect the movement of spirits via the disturbance of the paper. Crookes writes:
The Movement of Heavy Bodies with Contact but without Mechanical Exertion
This is one of the simplest forms of the phenomena observed. It varies in degree from a quivering or vibration of the room and its contents to the actual rising into the air of a heavy body when the hand is placed on it. The retort is obvious that if people are touching a thing when it moves, they push it, or pull it, or lift it; I have proved experimentally that this is not the case in numerous instances, but as a matter of evidence I attach little importance to this class of phenomena by itself, and only mention them as a preliminary to other movements of the same kind, but without contact.
These movements and indeed I may say the same of every kind of phenomenon are generally preceded by a peculiar cold air, sometimes amounting to a decided wind. I have had sheets of paper blown about by it, and a thermometer lowered several degrees.
William Crookes (1874). Researches in the Phenomena of Spiritualism, p. 86. London : J. Burns.
Crookes, it is clear, was monumentally gullible, and his claim that the rappings of the Fox sisters “were true objective occurrences not produced by trickery” should be compared with Margaret Fox’s own explanation:
Mrs. Underhill, my eldest sister, took Katie and me to Rochester. There it was that we discovered a new way to make the raps. My sister Katie was the first to observe that by swishing her fingers she could produce certain noises with her knuckles and joints, and that the same effect could be made with the toes. Finding that we could make raps with our feet—first with one foot and then with both—we practiced until we could do this easily when the room was dark.
Like most perplexing things when made clear, it is astonishing how easily it is done. The rappings are simply the result of a perfect control of the muscles of the leg below the knee, which govern the tendons of the foot and allow action of the toe and ankle bones that is not commonly known. Such perfect control is only possible when a child is taken at an early age and carefully and continually taught to practice the muscles, which grow stiff in later years. A child at twelve is almost too old. With control of the muscles of the foot, the toes may be brought down to the floor without any movement that is perceptible to the eye. The whole foot, in fact, can be made to give rappings by the use only of the muscles below the knee. This, then, is the simple explanation of the whole method of the knocks and raps.
Margaret Fox (1888), quoted in Harry Houdini (1924). A Magician Among The Spirits, pp. 7–8. New York: Harper.
[…] we first got the idea of producing with the joints similar sounds to those we had made by dropping apples with a string. From trying it with our fingers we then tried it with our feet, and it did not take long for us to find out that we could easily produce very loud raps by the action of the toe-joints when in contact with any substance which is a good conductor of sound. My sister Katie was the first to discover that we could make such peculiar noises with our fingers. We used to practice first with one foot and then the other, and finally we got so we could do it with hardly an effort.
Margaret Fox (1888), quoted in Reuben Davenport (1888). The Death Blow to Spiritualism, p. 90. New York: Dillingham.