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The novel is set in America in the "roaring" 1920s. The main areas are the Midwest (where Gatsby/Gatz, Nick, and Daisy are from) and the more urban East (in the New York City area). Almost all of the action takes place in the East but it is helpful to remember that these three characters all come from more rural beginnings.
Nick lives in West Egg, which is less fashionable than East Egg, across the bay where Daisy and Tom live. Gatsby's house is much more extravagant than Nick's making either of the two seem out of place. One of the most important descriptions of these settings occurs at the beginning of Chapter 2.
About half way between West Egg and New York the motor road hastily joins the railroad and runs beside it for a quarter of a mile, so as to shrink away from a certain desolate area of land. This is a valley of ashes—a fantastic farm where ashes grow like wheat into ridges and hills and grotesque gardens; where ashes take the forms of houses and chimneys and rising smoke and, finally, with a transcendent effort, of men who move dimly and already crumbling through the powdery air.
This wasteland, overlooked by the huge eyes of Dr. T. J. Eckleburg's billboard picture (a kind of absent god), is in stark comparison with the final image of Chapter 1. This image is of the green light at the end of Daisy's dock. For Gatsby, this green light symbolizes Daisy, success, and even money. Juxtaposing this positive image with the wasteland at the beginning of Chapter 2, Fitzgerald shows how the illusion or elusiveness of the American Dream. The green light represents success but it is only a symbol and it is out of reach. The wasteland or valley of ashes is a landscape itself and is connected to more prosperous areas such as West Egg. The valley of ashes is literally a place of wasted or missed opportunities and dreams.
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