In The Great Gatsby, why does Gatsby tell Nick his parents are dead?

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Jay Gatsby was born as James Gatz to farmers described as "shiftless." He never respected the lack of ambition of his parents and always longed for more money. By happenstance, he finds Dan Cody along his journey; Cody is a rich man who provides the now Jay Gatsby with lessons in culture, molding him into the powerfully wealthy man he will become.

Gatsby tells people that his parents have died because they do not fit into the image he has created for himself. This is a world where it's not just how much money you have that matters⁠—
it also matters how that wealth was acquired. (The old-school family money of East Egg, where Daisy lives, looks with condescension on the new money of West Egg.) Gatsby must assert that he belongs in this world. In order to maneuver successfully in Daisy's society, which is of ultimate importance, he must craft a background that is similar to that of others with whom Daisy and her friends associate.

Gatsby carefully crafts the image of himself that he presents to the world, and this is one area where fact must be sacrificed for the fiction to survive.

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Gatsby tells Nick that his parents are dead because he does not want Nick or anyone else to know anything about his origins. He is clearly not from a wealthy family or background, and throughout the entire novel, he does everything he can to obscure his beginnings.  Remember that his mission is to win Daisy, who is from a wealthy family, old wealth, not nouveau riche, as he is, and he believes that his real background would not appeal to her. In spite of how much he loves Daisy, Gatsby realizes deep down that she is a material girl.  Think of how impressed she is by his just all of his shirts!  Whatever Tom Buchanan's failing are, and they are many, he is from the same world as Daisy, and Gatsby believes he must be able to compete with Tom. Gatsby relies on concealing his origins and on the wealth he has managed to accumulate. But if Daisy knew that he was from a lower-class background, he is sure he would be out of the running.  And as it turns out, he is correct, since Daisy will not leave Tom for Gatsby.  She knows that Gatsby is not from her world, no matter how much money he has, and thus Gatsby is unable to attain his dream girl. 

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