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When Atticus praises Jem by telling her she has "perpetrated a near libel," his praise is ironic because libel is a criminal act. To commit libel is to publish a statement intended to defame the character of another person (or group of people). Aside from its criminal aspect, libel is generally not an act for which someone would receive praise, because it carries with it a strongly negative association. So, for Jem to receive a positive response for what is certainly a negative action amplifies the irony of Atticus's statement.
In Chapter Eight of To Kill a Mockingbird, Maycomb experiences a "real winter" which includes some light snow, and Jem and Scout "borrow" Miss Maudie's snow in order to make a snowman. They transfer the snow from Miss Maudie's yard into their own yard using an old peach basket and begin to shape their creation. Using a foundation of dirt covered with the snow they could scrape up, the sibling create a snowman version of Mr. Avery. When Atticus sees this creation, he comments that Jem has "perpetrated a near libel here in the front yard" and suggests that they "disguise this fellow" by giving him a broom and an apron. Instead, Jem gives the snowman a set of hedge-clippers and a sun hat.
Atticus' comment of this "near libel" is ironic in several ways. First, Atticus has positioned this statement as a compliment, paying tribute to Jem's attention to detail and creative prowess; his work is so good that it could be perceived as a caricature and offend Mr. Avery. It's ironic and funny that something as harmless as a snowman could cause so much trouble.
Additionally, the chapter began with Mr. Avery informing Jem and Scout that the weather changes seasons when children behave badly, so the pair creating a snowman of this grumpy figure out of a product of that bad weather seems to be an ironic response to his criticism.
In chapter 8, Jem and Scout create a snowman out of snow and earth, since there isn't enough snow to create a completely white snowman. At first Scout says it looks like a black man, but then Jem applies wood, sticks, and patches of snow to make it look like Mr. Avery. When Atticus comes home to see the snowman, he is amazed at how perfectly Jem made it look like Mr. Avery. This is when Atticus makes his ironic comment, as follows:
"Son, I can't tell what you're going to be—an engineer, a lawyer, or a portrait painter. You've perpetrated a near libel here in the front yard. We've got to disguise this fellow" (67).
Two key words need to be understood in this instance: Libel means to defame someone through writing or pictures and then follow through with publishing it. Next, irony is when the opposite of what is expected actually happens. When Atticus says "near libel," it means that the snowman can't stay in its original form because people will all know it is Mr. Avery whom Jem is imitating.
The snowman could look as if it is urinating, because the kids caught Mr. Avery doing the exact same thing off his porch one summer night. If that's the case, then it would certainly be a defamatory snowman, identified by all the neighbors, as well as greatly unexpected by Atticus. If that is correct, this explains why Jem gets an apron to cover up the lower half of the snowman's body and why he's asked to change it.
Atticus's laughter and comment praise Jem, but also show situational irony because he didn't expect his son to be able to create something that so accurately depicts a neighbor. This can also be termed verbal irony when he says "near libel," because the connection that he makes to a criminal act is unexpected. Furthermore, if the snowman is not depicting Mr. Avery urinating, it's ironic that Atticus would use such a strong term with criminal connotations for a little snowman, which is not criminal in any way. But the fact that Atticus is a lawyer, and Jem's dad, makes the whole scene hilarious, too.
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