Why does Gatsby lie about his past?
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For Jay Gatsby (or James Gatz, his original name), his past is a roadblock to his future. Gatsby is, or at least wants to be, the embodiment of the American Dream, even if this means lying and participating in criminal activities to achieve this life. If he wants a girl like Daisy, he can't be the penniless Minnesota boy he once was, he has to be the "great" Gatsby. Nothing about his old life holds any value for him. Gatsby's poverty is what made him go off to war in the first place in order to make himself worthy of Daisy, who married the wealthy Tom Buchanan while Jay was away.
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Well, I'm afraid it's Mia Farrow as Daisy Buchanan who said it best: "Because rich girls don't marry poor boys, Jay Gatsby!" Ironically, that quote isn't found in the novel at all, but only in the film adaptation. Fits, though, ... doesn't it? James Gatz, as himself, could never win Jay Gatsby's greatest obsession: Daisy. That fact was so very apparent that James Gatz changed the name, itself, in order to change the metal of his person. Even so, Jay Gatsby still wound up on the "less fashionable" West Egg slumped in with the new rich, ... so far from Daisy that he had to be satisfied (yeah, right) with staring at the green light at the end of her dock. And look where Gatsby is now: dead. Lies never get us anywhere, do they?
From an early age, Jay Gatz was interested in self-improvement. He wanted more than what it appeared his life was going to give him naturally, so he began to work at making himself more than he already was. We know he had great aspirations for himself because as soon as he has an opportune moment he creates his new and improved self, name and all. He wants the girl, of course, so he hides what he came from once he meets her; and of course it drives him to accomplish great things financially, anyway. But the truth is, he made his first changes before he ever met Daisy, so it was not all just for the girl. Jay wanted to be more than he was and has to lie about his past to become who he wants to be.
Gatsby lies about himself and his past as part of his goal of self-formation and self-creation. In order for Gatsby to fully become Gatsby - not Gatz - he has to let go of the past.
This is true only because of the severity or extremity of his desire to conquer his relative poverty and relative lack of power, as Gatz, by becoming rich and powerful in a way that will be, for him, nearly absolute.
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