What is the significance of Part 2 of "An Occurrence at Owl Creek Bridge"?

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Part 2 of this wonderful story is significant because of how it practically functions in terms of explaining Farquhar's unfortunate opening situation. Part 1 opens by telling readers that there is a guy about to be executed on a bridge. Part 2 is a flashback that explains why the man is being executed on the bridge. Part 2 builds Farquhar's character for readers. By the end of the first part, readers don't really care for Farquhar. We don't have any reason to care for him. We sympathize that he is about to die, but we do figure that he is an enemy combatant, it is war, and his death is nothing new or significant. Part 2 gives readers reason to care for Farquhar. We see that he's married, and that he wants to play a bigger role for the side he supports. What then makes us so sympathetic to his plight is that part 2 lets readers know that Farquhar has been set up through a devious ploy.

The lady had now brought the water, which the soldier drank. He
thanked her ceremoniously, bowed to her husband and rode away. An
hour later, after nightfall, he repassed the plantation, going northward in the direction from which he had come. He was a Federal scout.

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Ambrose Bierce's story has a marvelous opening. A reader could hardly stop reading after being captured by the first sentences.

A man stood upon a railroad bridge in northern Alabama, looking down into the swift water twenty feet below. The man's hands were behind his back, the wrists bound with a cord. A rope closely encircled his neck. It was attached to a stout cross-timber above his head and the slack fell to the level of his knees. Some loose boards laid upon the ties supporting the rails of the railway supplied a footing for him and his executioners.

Bierce is able to open his story like this because he postpones the necessary exposition until Part 2, which works like a flashback. In Part 1 the man is waiting to be hanged. In Part 3 he imagines the rope has broken and he is in the surging creek trying to free his hands and escape. But Bierce never describes what the man actually did to get himself into that situation. Part 2 supplies the necessary information to enable the reader to imagine pretty vividly, without being told, what Peyton Farquhar actually did and how he got caught:

"The Yanks are repairing the railroads," said the man, "and are getting ready for another advance. They have reached the Owl Creek bridge, put it in order and built a stockade on the north bank. The commandant has issued an order, which is posted everywhere, declaring that any civilian caught interfering with the railroad, its bridges, tunnels, or trains will be summarily hanged. I saw the order."
The soldier reflected. "I was there a month ago," he replied. "I observed that the flood of last winter had lodged a great quantity of driftwood against the wooden pier at this end of the bridge. It is now dry and would burn like tinder."

Part 2 of "An Occurrence at Owl Creek Bridge" ends with the ominous words,

He was a Federal scout.

We can picture Farquhar riding north, leaving his horse hitched to a tree some distance from the bridge, sneaking up silently in the dark with his matches and kerosene. Everything is perfectly quiet. He reaches the dry driftwood and pours his kerosene, then strikes a match and gets ready to run back to his horse. By the light of his own fire, plus the lights of dozens of suddenly uncovered dark lanterns all focused on him, he sees that he has walked into a trap. He is surrounded by Union soldiers, who are all witnesses to his arson attempt and who will be prepared to hang him tomorrow morning.

None of this is expressed in the text, but it is so obvious that it speaks for itself. There is something a little uncanny about the way Ambrose Bierce creates a sort of fourth-dimensional scene.

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