"Hold" here means to maintain or subscribe to an opinion, as in "holding a view":

"Hold
5. [with object] have (a belief or opinion):
I feel nothing but pity for someone who holds such chauvinistic views
[with clause]:
they hold that all literature is empty of meaning"
http://oxforddictionaries.com/definition/hold?q=hold

"Perfection" refers to the doctrine of perfection, a key element in Quaker belief and a highly notorious one in the period when Watson was writing. It is articulated by early Quakers in the mid-seventeenth century, such as George Fox, and Robert Barclay in the 8th proposition of his Apology for the True Christian Divinity (1678). It means not precisely that there is no such thing as original sin, but that it is possible to reach a state, in this life, of freedom from original sin, equivalent to the state of man before the Fall: a state of immunity from sin and from the temptation to sin. It is diametrically opposed to the views of puritans such as Watson.

"Concerning Perfection
In whom this pure and holy birth is fully brought forth, the body of death and sin comes to be crucified and removed, and their hearts united and subjected to the Truth: so as not to obey any suggestions or temptations of the evil one, but to be free from actual sinning and transgressing of the law of God, and in that respect perfect: yet doth this perfection still admit of a growth; and there remaineth always, in some part, a possibility of sinning, where the mind doth not most diligently and watchfully attend unto the Lord."
http://www.qhpress.org/texts/barclay/apology/prop8.html

"This covenant of peace, or state of perfection, was expressed by Fox in an earlier, 1648, opening in which he saw himself return to the state of Adam before the fall. He wrote in his Journal "now I was come up in spirit through the flaming sword into the paradise of God. All things were new and all the creation gave another smell unto me than before, beyond what words can utter. I knew nothing but pureness, and innocency, and righteousness, being renewed up into the image of God by Christ Jesus, so that I say I was come up to the state of Adam which he was in before he fell."6 He felt himself taken back to before the fall and original sin.
This doctrine of perfection held by Quakers, though few actually claimed perfection for themselves, was central to the message of George Fox. It stood in contrast to the doctrine of human depravity held by the puritans, and with the Anglicans and Roman Catholics which were seen to emphasize ritual which had become empty."
http://www.all-creatures.org/articles/pea-quakers-01.html

"The following discourse passed between Thomas Powell, who calls himself a minister of the gospel, and John Vaughton, a Quaker, the 29th of the 2d. mo., 1676.
T. Powell.--You Quakers hold damnable and erroneous doctrines.
J. Vaughton.--What doctrine is it that we hold that is erroneous and damnable?
T. P. — You hold perfection."
Society of Friends, The Friend, vol. 11 (1838)
http://books.google.es/books?id=Uj8rAAAAYAAJ&pg=PA383&lpg=PA...

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Note added at 7 hrs (2012-05-07 16:52:25 GMT)
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This use of "hold" meaning to believe or profess a religious doctrine, illustrated in my last reference, was common usage up to the nineteenth century, and is found even today:

"EUCHARIST
Catechism #1322-1419
[...]
5. Beliefs of Other Christians
Catholics hold transubstantiation, change of bread and wine into the body and blood of Christ.
Lutherans hold consubstantiation - bread and wine and Jesus’ body and blood coexist together.
Calvinists (Presbyterians) hold a symbolic belief with the Eucharist being truly grace bearing."
http://www.rciaresources.com/TalkOutlineFiles/Eucharist.htm

"Therefore, when we dispute against them that hold transubstantiation, and the ubiquity of Christ's body, we do assuredly conclude that sense is judge, whether there be real bread and wine present, or not"
Richard Baxter (1831)
http://books.google.es/books?id=0FlCAAAAIAAJ&pg=PA210&lpg=PA...