How is Dexter affected by the news that Judy has married another man and subsequently lost her beauty? What does Dexter mean when he says "there was something in me, but now it's gone"?  

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When Devlin first mentions that Judy's looks, at twenty-seven, are "all right," Dexter finds his assessment ludicrous, protesting that "she was a great beauty." He already knows that she has been married, but the details of the marriage in its current state seem to unsettle Dexter. He learns that Judy's...

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When Devlin first mentions that Judy's looks, at twenty-seven, are "all right," Dexter finds his assessment ludicrous, protesting that "she was a great beauty." He already knows that she has been married, but the details of the marriage in its current state seem to unsettle Dexter. He learns that Judy's husband Lud Simms "drinks and runs around" while she stays home with their children and when Lud is "particularly outrageous she forgives him." Dexter had by now come to the conclusion that he could never have Judy, and he was at peace with the knowledge that he would still love her "until the day he was too old for loving." Judy was an impossible dream for Dexter.

The knowledge that her life has turned out the way it has disappoints Dexter. But perhaps more importantly, Dexter realizes that his conception of what Judy once was, an object of his desire, and a part of his ambitions for a better life, is "no longer." It is a sort of death for him, an irrevocable piece of his own past, and thus a watershed. Tied to a youthful and beautiful Judy was an ambitious and determined Dexter, and he realizes that those two people have passed from the world into memory.

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As a young man, Dexter is ambitious and determined. He dreams of being more than just a caddy. He has "winter dreams" of a better life. The narrator adds that he is not a snob, but he does have a desire for an upper class kind of life: 

Often he reached out for the best without knowing why he wanted it---and sometimes he ran up against the mysterious denials and prohibitions in which life indulges. It is with one of those denials and not with his career as a whole that this story deals. 

Dexter had this urge to reach out for something better or something higher. Perhaps, this is simply his understanding of what it means to reach for the American Dream. He associates Judy's looks and money with the upper class and the glittering world of his aspirations.

Judy's looks fade as she gets older. When Dexter learns of this, he comes to the realization that her beauty is/was superficial and fleeting. Likewise, the glittering world of the elite social class she belonged to also became quite superficial to him. Dexter has an epiphany that this once evocative, fantastic world of his dreams had always been superficial, shallow, and fleeting. It leaves him feeling empty that this dream is gone now because he sees that there was never any substance in it. 

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