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Steinbeck as well educated and came from an affluent family. He had a burning ambition to write and he travelled through California working on ranches as George and Lennie did. Steinbeck was largely cataloguing the lifestyle of the people living the itinerant lifestyle that the ranchers had, whilst demonstrating the loneliness and isolation of such an existence. He was aware of the huge social and economic difficulties that these people faced, and also how their way of life was being eroded by the increase in mechanisation of farm work.
The novel is set in Salinas, California which is where Steinbeck was from. Using this setting was a regular feature in his writing and gave his novels a realistic feel.
Steinbeck was therefore inspired by his own experiences and through the stories of real people that he met. The characters in the novel are probably amalgamations of various people he encountered.
John Steinbeck once wrote to a friend, "I think I would like to write the story of this whole valley,of all the little towns and all the farms and the ranches in the wilder hills. I can see how I would like to do it so that it would be the valley of the world.” The valley that he is referencing is the Salinas Valley in California, where he grew up and lived in at times in his adult life. Though Steinbeck came from a relatively well-off family, he had much familiarity with the experiences of the migrant workers in the region since he grew up there. As an adult, he traveled through the small valleys to gain first hand experience from the workers. It doesn't appear that there was one specific event that led to Of Mice and Men, but Steinbeck was interested in the plight of the migrant worker, and, really, human suffering in general. This novella was an experimental form to try to explore and comment on both of these issues.
John Steinbeck was inspired to write Of Mice and Men, which was intended as a story for both stage and book form, by his childhood observations of the poor migrant workers scratching out a meager living traveling from one ranch or farm to another. Born and raised in Salinas, California, the setting for much of his literature, that region’s agricultural sector was heavily dependent upon such inexpensive labor, and the economic conditions resulting from both the Great Depression and the destruction of the Oklahoma agricultural sector – the so-called Dust Bowl. Steinbeck himself worked on the ranches that populated that area of California and was introduced to many of the people whose lives and experiences would be represented in novels like Of Mice and Men, The Grapes of Wrath and, even, East of Eden.
Kiwi summarizes exactly what you need to know. His answer was very helpful to me in my search for a satisfying answer to this question. Thank you.
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