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The story was published in The New Yorker in 1948, and it would seem to be taking place at about that time in America. Old Man Warner expresses the superstition that if there is a lottery in June the corn will be "heavy" soon. The tradition would seem to hearken back to primitive rituals involving human sacrifice to insure agricultural bounty. The explicit reference to corn strongly suggests that the locale is the "Corn Belt" in the Midwest--probably somewhere in eastern Nebraska, Iowa, or southern Illinois.
In the 1940s The New Yorker was a sophisticated, urban magazine whose content was focused on New York City and its immediate environs. Since then the magazine has widened its coverage dramatically for economic and demographic reasons, but in the 1940s the staff and contributors prided themselves on the belief that the world ended west of the Hudson River. The violent reception Shirley Jackson's story received when it first appeared can be attributed largely to rural Americans' objection to having themselves depicted as ignorant, superstitious, backward yokels by a slick big-city publication. That apparently was the intention of the story and its publication in The New Yorker. If the people of the Corn Belt felt they were being insulted, they were right.
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