The setting is London, an appropriate stage for the culture clash between the upper-crust Duchess and the self-made, nouveau riche jeweler. At that time, London epitomized a changing society, a society in which growing numbers of the wealthy bourgeoisie married their way into the traditional upper classes. Such marriages were often based on the same kind of arrangement that the jeweler makes with the Duchess. The middle classes brought considerable wealth to their marriages, whereas the upper classes brought breeding and the social cachet of a good name.
In most cases, such arrangements doubtless worked out in everyone's best interests. But in "The Duchess and the Jeweller," Woolf is drawing our attention to the less savory side of relations between the middle and the upper classes. Both the Duchess and the jeweler, in their own individual ways, are corrupted by the shabby devil's bargain into which they enter. In order to pay off her gambling debts, the Duchess is obliged to invite Bacon—a man she normally wouldn't allow through the front door—to pay court to her daughter, Diana. And for his part, Bacon the jeweler is obliged to accept a worthless set of pearls from the Duchess, which he knows full well to be fake. In entering into this grubby deal, Bacon has sacrificed his professional integrity as a jeweler just so he can fulfill his fantasies of spending time with the Duchess's daughter.