Hi sigprn, welcome to Outdoorking.
The purpose of the governor spring is to increase the engine speed, while the centrifugal governor mechanism inside the crankcase has the purpose of decreasing the engine speed. Hence to increase the maximum engine speed you must increase the maximum spring tension. You increase the spring tension by anchoring it further away from the governor arm pivot, which means in the lower hole in the arm, or if the two holes are at the fixed end of the spring, the hole further away from the governor arm. So you are correct, you can decrease the maximum engine speed by moving the spring to the upper hole.
Remember, you need to ensure that the governor arm itself is correctly adjusted before you try to measure maximum engine speed. To do this, you loosen the clamp bolt on the governor arm where the governor shaft passes through it. Pull the top of the governor arm as far as it will go to the right, verifying that the throttle is then wide open. Hold the arm in that position and turn the governor shaft as far as it will go clockwise. Then, holding both arm and shaft in that position, retighten the clamp bolt.
