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There are several rumors circulating about Gatsby, mostly about how he made his fortune. Bootlegging is the most common, and most probable, though all the others deal with criminal activity of some kind. There are also many speculations about where he came from, where he went to school, etc.
The more significant aspect of this question is why Fitzgerald presents Gatsby's character through rumors. First, we are experiencing the novel through Nick's perspective. Therefore, the audience discovers information as Nick does. Nick doesn't find out Gatsby's true story until later on the novel (Chapter 6). Second, much of the appeal of Gatsby is his mystery. If we knew facts about Gatsby rather than rumors, the mystery would be gone. Finally, it is important to Gatsby's psychological development that we get to know him in stages. By the time his true past is revealed, we are captivated and intrigued. As he tells Nick his true background, we move from captivated to sympathetic, an important transition for the ending of the novel to be fully felt.
In The Great Gatsby by American writer F. Scott Fitzgerald, rumors that have been told about Gatsby include some thinking that he is Kaiser Wilhelm’s nephew or cousin. Some believe this is the origin of all his wealth, as Gatsby lives in an opulent mansion in West Egg, Long Island.
Another rumor revealed in the novel is that one young woman says that Gatsby doesn’t want trouble with anybody. She had ripped her gown at a previous party at Gatsby’s and he had a new gown sent to her residence the following week. She states to others that he did this for the aforementioned reason. This is not her opinion, but it is a rumor she is spreading. She says that somebody told her that Gatsby doesn’t want trouble with anyone. There is no evidence that Gatsby, here, is worried about trouble.
In addition, a rumor going around about Gatsby is that he killed a man. Furthermore, rumors exist that he was a spy for the Germans and also that he was a soldier in the U.S. army. Rumors also exist because one woman doesn’t believe that Gatsby went to Oxford, even though he told her that he did. She tells Nick she doesn’t believe Gatsby.
As the novel progresses it is revealed that some believe Gatsby to be a bootlegger. This could explain his wealth as he would have reaped significant dollars from an illegal activity and evaded taxes in the process.
F. Scott Fitzgerald reveals rumors rather than fact in the novel to add mystery to the novel - and to Gatsby’s character, as the above educator writergal06 rightly notes: “much of the appeal of Gatsby is his mystery.”
Furthermore, Fitzgerald reveals rumors so that readers can form their own opinion of Gatsby as the story progresses, and then change or refine those opinions as facts are revealed in the story. In this way, readers are participants in the mystery of the story. It’s important to note that in Chapter Four of the novel, Gatsby himself asks Nick, “Look here, old sport,” he broke out surprisingly. “What’s your opinion of me, anyhow?”
Gatsby wants Nick to understand who he truly is; at least that is what he says to Nick. He says, in essence, that he doesn’t want Nick to have a tainted view or opinion of him based on stories (rumors) that he has heard from various people.
In the end, the reader has to form his or her own opinion of Gatsby, through facts revealed about him in the novel as it goes along, and through Gatsby’s actions in the novel. Nonetheless, Nick relates that what is important is:
“…it is what preyed on Gatsby, what foul dust floated in the wake of his dreams that temporarily closed out my interest in the abortive sorrows and short-winded elations of men.”
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