In "A Rose for Emily," how is setting used to convey the mood?

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Of course, this story is set in a racist society where racism goes unchallenged and accepted. It is highly interesting how Miss Emily, the fading aristocrat, is treated by her townsfolk as time goes by. A key part of the setting that is used to create the ominous mood of gloom and decay is the house of Miss Emily. Note how it is described at the beginning of the story when the deputation of townsfolk are admitted into the house:

When the Negro opened the blinds of one window they could see that the leather was cracked; and when they sat down, a faint dust rose sluggishly about their thighs spinning with slow motes in the single sun-ray. On a tarnished gilt easel before the fireplace stood a crayon portrait of Miss Emily's father.

Clearly here the dust, darkness, stillness and neglect create a frightening and disturbing mood of dilapidation.

Note how this mood is reinforced when the door to the bedroom is broken down:

The violence of breaking down the door seemed to fill this room with pervading dust. A thin, acrid pall as of the tomb seemed to lie everywhere upon this room decked and furnished as for a bridal: upon the valance curtains of faded rose colour, upon the rose-shaded lights, upon the dressing table, upon the delicate array of crystal and the man's toilet things backed with tarnished silver, silver so tarnished that the monogram was obscured.

The description of this room creates an almost haunted mood with the eerie, tragic and lonely details of the bridal paraphernalia. We are presented with the literary descendent of Miss Havisham, for whom time has stopped and the realities of the passing years and life have not impacted her. The mood then is supported by the setting to present us with a character who was so desperate for love that she has locked both her dead, decomposing lover and herself away from society so she could ignore reality.