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In a larger sense, Holden is making a statement about the “accepted” social setting of the time period. Pencey is seen as a prep school where students appear to be upstanding, where the adults are driven to do everything possible to nurture the emotional and intellectual development of their students, as well as to create a vision of harmony and unity. Holden strikes at this with his label of “phonies.” His narrative includes adults and colleagues who are manipulative and self serving, driven by their own narcissism and sense of cunning. In this light, Holden’s assessment helps to bring to light the disingenuous and fragmented nature of the reality that underscores the school. Holden’s assessment is one that brings to light the disconnect between how individual act for the sake of social expectation and how they might really be when only the private remains. In this light, his statements reflect the vast divide that exists between both domains.
In the very first chapter, Holden says:
Pencey was full of crooks. Quite a few guys came from these wealthy families, but it was full of crooks anyway. The more expensive a school is, the more crooks it has. I'm not kidding.
He explains that someone stole his good camel hair coat the week before, so while he was watching the football game, he was freezing, because of not having his good coat. Holden does not understand why rich boys have to steal, but they do. He believes it is just the way things are. The more boys don't need to steal because of their richness, the more they do steal. It makes no sense tohim.
Throughout the rest of the novel, Holden often refers to people at Pencey (and everywhere else, for that matter) as phonies. The students are phonies, the teachers are phonies, the people that come to Pencey as speakers are phonies (like the undertaker) and the administrators of the school are phonies.
Holden's roommate Stradlater is a phony because he has a "nice guy" image but he is really a jerk. He gets others to do his work so that he can go out on dates and pretend to be a "stud". Robert Ackley, a fellow classmate, is a phony and an annoying nuisance. Holden explains that Pencey in general is full of phonies and even the advertisement for Pencey that is published in many magazines is phony. It shows a boy jumping over a fence on a horse, which is phony, Holden claims. It makes it appear as if all one does at Pencey is play polo, and that is phony. The magazine ad claims to mold boys into upstanding young men and Holden complains that the only upstanding young men at Pencey are only one or two boys he knows, and they probably came to Pencey that way.
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