man standing off to the side looking down at a marble bust of another man laying atop a pile of broken columns

By the Waters of Babylon

by Stephen Vincent Benét
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What does John mean when he says, "It is better to lose one's life than one's spirit"? 

I'm not sure, but I think that the quote is meant to convey a sense of urgency. John doesn't want to go to the Place of the Gods, but he knows that not going would be worse. So, he's saying that it is better to do something you don't want to do, than live with regrets.

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The story that you are asking about is "By the Waters of Babylon " by Stephen Vincent Benet.  The quote that you are asking about occurs fairly early in the story.  John has left to go to the Place of the Gods, but he has not crossed the river...

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The story that you are asking about is "By the Waters of Babylon" by Stephen Vincent Benet.  The quote that you are asking about occurs fairly early in the story.  John has left to go to the Place of the Gods, but he has not crossed the river into the city proper.  The quote is better understood with a bit more text with it.  

If I went to the Place of the Gods, I would surely die, but, if I did not go, I could never be at peace with my spirit again. It is better to lose one's life than one's spirit, if one is a priest and the son of a priest.

John is genuinely afraid of going to the Place of the Gods.  All of his life he has been taught that the Place of the Gods is a forbidden location.  He has been taught that anybody that goes there will die.  John truly believes that he will die, when he crosses the river to enter the city.  

John's quote about his spirit is the equivalent of somebody saying "If I'm going to die, I want to die a man."  Or, "If I'm going to die, I want to die happy/honorably/bravely/etc."  John knows that going to the Place of the Gods is something the he doesn't want to do; it is something that he must do. John is saying that if he simply returns home without having crossed the river, he will always be unhappy with himself.  John is not willing to live the rest of his life like that.  That's why he says that it is better to die than live with an upset or absent spirit. 

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