The situation in which Jay Gatsby speaks about his time at Oxford University plays itself out in circumstances which lead to a dramatic turning-point in the novel. Tom, Daisy, Jay, Nick, and Jordan are all in Tom's New York apartment after having decided to leave the house. It is extremely hot. Daisy has driven in with Jay in Tom's car, whilst the others have travelled in Jay's vehicle.
At the beginning of the journey, Tom noticed the closeness between his wife and Jay and made a number of deprecating remarks about Jay during the journey. It was clear that there would be a confrontation between the two men. Tom has realised that there is something going on between Daisy and Jay and is obviously upset about the relationship.
Soon after their arrival at the apartment, Tom deliberately starts picking on Jay. He aggressively wants to know where Jay picked up the expression 'old sport.' Daisy scolds him for becoming personal and for a brief while they speak of a nondescript character called Biloxi. Tom, clearly intent on a confrontation, then states, very directly:
“By the way, Mr. Gatsby, I understand you’re an Oxford man.”
Jay counters his statement and their conversation goes as follows:
“Oh, yes, I understand you went to Oxford.”
“Yes—I went there.”
A pause. Then Tom’s voice, incredulous and insulting: “You must have gone there about the time Biloxi went to New Haven.”
There is a brief interlude, caused by a waiter bringing ice and crushed mint. The conversation then resumes:
“I told you I went there,” said Gatsby.
“I heard you, but I’d like to know when.”
“It was in nineteen-nineteen, I only stayed five months. That’s why I can’t really call myself an Oxford man.”
Tom glanced around to see if we mirrored his unbelief. But we were all looking at Gatsby.
“It was an opportunity they gave to some of the officers after the Armistice,” he continued. “We could go to any of the universities in England or France.”
Nick is mightily pleased with Jay's straightforward and honest response, and states:
I wanted to get up and slap him on the back. I had one of those renewals of complete faith in him that I’d experienced before.
The reason why Nick is so pleased is because Jay has proved that he can stand up for himself and will not be bullied by Tom. He is undoubtedly not afraid of Tom and is more than prepared to challenge him. Jay is ready for battle and will defend his integrity as well as his motives. Nick believes in him and is encouraged by his brave response.
Unfortunately, that will not be enough, for later, when the confrontation between the two adversaries becomes heated and more serious and includes a number of accusations against Jay, and also involves Daisy, she withdraws as illustrated by the following extract:
...he began to talk excitedly to Daisy, denying everything, defending his name against accusations that had not been made. But with every word she was drawing further and further into herself, so he gave that up, and only the dead dream fought on as the afternoon slipped away, trying to touch what was no longer tangible, struggling unhappily, undespairingly, toward that lost voice across the room.
It is then that Gatsby realises that his dream about having Daisy has died and he fruitlessly tries to bring it back to life again.
Gatsby is an enigma. Stories are flying about concerning this hidden and secretive man. Where did his money come from? Who was he before he arrived, a rich socialite, into the lives of the Long Island elite? When Nick is at the party, he hears many different versions of Gatsby's life and dealings. To hear Gatsby talk openly and honestly about anything satisfies Nick's curiosity and concern about this "friend" he has acquired.
Tom is really anxious to prove that Gatsby is a complete fake--that he has no right to high society no matter how much money he has. It is easier for him to bully Jay this way than to directly accuse Daisy of being in love with Jay, because Tom has to also show (in company) that he is the greater gentleman. He wants to show that he has inborn class that Gatsby will never have. The moment of Jay admitting that he was at Oxford only 5 months is a relief to Nick, however, because it sounds truer than many of Jay's claims. Nick admires Gatsby's ambition and energy, even when he finds the latter's aesthetic choices over-the-top or questionable.