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Irony appears in Waterland primarily as an illustration of the long-term affects of the events Tom describes in his history lessons, specifically his relationship to his wife, Mary. Tom's reaction to the students' disinterest in history is to begin telling tales of local history based on his knowledge and memory. This is Tom's attempt to save his job and the history department at his school; however, by doing so, he is undermining the idea of historic accuracy, as his own inherent bias creates a story that cannot be supported with primary and secondary sources. It is ironic that Tom's actions to save his job teaching history involve him teaching subject matter that cannot be considered historically objective.

Ironies exist within the overall plot as well. In the past, Mary is pregnant with a child that could have been fathered by Tom or his brother, Dick. In order to protect Tom, Mary tells Dick that neither of the brothers is the father. Mary and Tom go to a local woman to get an abortion, leaving Mary unable to have children. This trauma ultimately causes her to steal a baby, the resulting publicity of which gives the school enough reason to force Tom into retirement; Mary is sent to a mental institution. The action taken by Mary in her youth to protect herself and Tom ironically leads to Tom losing his job and Mary being institutionalized.

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