In The Scarlet Letter, why is Pearl often compared to an elf? 

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A preternatural creature that is given to mischievous, capricious acts, an elf is a fitting description for Pearl, "the scarlet letter endowed with life." For, as the incarnation of Hester's sin, Pearl becomes Hester's bane at times since Hester has been sentenced to be "a living sermon against sin."

Pearl is "imbued with a spell of infinite variety" as she exhibits a capricious nature since, Hawthorne writes, "the warfare of Hester's spirit...was perpetuated in Pearl." So often Hester must clutch Pearl to her bosom in order to convince herself that this "sprite" is indeed human and not a delusion.  Many times, too, there is a bewilderment in Hester and a "baffling spell" between mother and child as the capricious Pearl scowls and clenches her fist in anger, then just as quickly she laughs.  Because of her unique nature, the Puritan children disparage Pearl with epithets, but Pearl retaliates in "a fierce temper," and a show of "the evil that existed in her" to Hester.  At the same time, when Hester cries out in agony at this recognition of her sinfulness which elicits prayers from her mouth, the elfish Pearl then smiles and resumes her childish games.

Moreover, Pearl is clearly sprite-like in her reactions to Hester's scarlet letter. With a "freakish, elvish" look on her face, Pearl seems to mock her mother in Chapter III when she gathers flowers and then pelts them at Hester's letter. Pained by this act, Hester looks with melancholy into the dark eyes of Pearl, "the laughing image of a fiend."

"Child, what art thou?"

"Oh, I am your little Pearl"

But while she said it, Pearl laughed, and began to dance up and down with the humoursome gesticulation of a little imp....

In Chapter VIII when Hester and Pearl come to the mansion of Governor Bellingham, Pearl refuses to behave and again mocks her mother's sin as she points to the reflection of the scarlet letter in the gleaming armor of the governor,

That look of naughty merriment was likewise reflected in the mirror...that it made Hester Prynne feel as if it could not be the image of her own child, but of an imp who was seeking to mould itself into Pearl's shape.

When questioned by the Reverend Mr. Wilson on who made her, Pearl refuses to recite her catechism and impetuously replies that she was plucked by her mother off the bush of wild roses that grow by the prison door. Further, in Chapter XV, Pearl mimics her mother by placing seaweed in the shape of an A on her own breast; then, questioning her mother repeatedly about the meaning of the scarlet letter, Pearl forces Hester to deny the significance of the letter.  But, this letter is obviously meaningful to Pearl, who tells her mother that the sunshine does not like her because it is afraid of something on her bosom.  And, in Chapter XIX, it is the "sprite" Pearl who prevents her mother from trying to escape her shame. For, Pearl screams in a fit of passion until Hester restores the cast off letter upon her bosom.

The embodiment of Hester's conscience, Pearl represents the conflicts within. As the elf-like child, Pearl evokes both the evil and the good with caprice, a living conscience.  And, it is not until Chapter XXIII when Reverend Dimmesdale acknowledges her as his daughter that Pearl truly becomes fully human since her "errand as a messenger of anguish was all fulfilled."

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An important part of Pearl's character is the way that she is developed as being somehow other-worldly or possessing a supernatural nature. From her very first introduction in the novel as a child in the chapter bearing her name, Hawthorne stresses again and again this aspect to her character. Note the following quote as an example:

She seemed rather an airy sprite, which, after playing its fantastic sports for a little while upon the cottage floor, would flit away with a mocking smile. Whenever that look appeared in her wild, bright, deeply black eyes, it invested her with a strange remoteness and intangibility; it was as if she were hovering in the air and might vanish, like a glimmering light that comes we know not whence and goes we know not whither.

Pearl is therefore repeatedly referred to as an "elf" or "elf-child" because of the way in which she is so different from other children. Whether this is because of the manner of her conception or her upbringing as a child of sin in the eyes of the Puritan community where she grew up, Hawthorne does not make this clear, but it is clear that her uniqueness and difference gives her a kind of authority that impacts the other characters. Consider the way in which it is she that returns her mother's scarlet letter to her when Hester attempts to throw it away.

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