Gogol's novel is better known because of its history than because of its content. Only part one and a few fragments of a draft of part two exist of the three planned; this is not in itself particularly unusual, but in fact Gogol completed the second and destroyed it, and died as the result of fasting to prepare himself for writing the third.
The story that remains in the first part was suggested to Gogol by Pushkin, as was his play The Government Inspector. The central character, the minor nobleman Chichikov, travels around a backward district of Russia buying up "dead souls". When serfdom was in existence in Russia (and it wasn't abolished until after Gogol's death), wealth was reckoned in souls, the number of serfs owned by an individual, and this also determined the amount of tax paid. Each census would reassess the number of souls owned by a landowner, and this figure would determine the level of tax they paid until the next one. Chichikov was buying the right to the names of the serfs who had died since the last census, just a liability to the owner since tax had to be paid but no work could be got out of them. It is quite a way into the novel before the purpose Chichikov has for these useless paper souls is revealed, but it is clear that it is going to be some kind of swindle. When the first part was submitted to the censors, they insisted that the title be changed, as they felt that Dead Souls sounded as though the novel was an attack on the church's doctrine of the immortality of the soul.
This kind of (to us bizarre) brush with the censor was routine for a nineteenth century Russian novelist, and was not the cause of the burning of part two. Gogol fell under the influence of a fanatically strict priest, who convinced him that the novel was sinful. This may have been a general prohibition on fiction, novels often being condemned as immoral, but it could also have been something specific to Dead Souls. After completion of the first part, Gogol decided that what he wanted to write about was the redemption of Chichikov, and he convinced himself that his work would bring a transformation in Russian society. This could well have been seen by a zealot as something prejudicial to the interests of the church. The information I have doesn't go into details of the reasons for the priest's opposition to the work; all that is certain about it is that it led to the eventual burning of the manuscript, after considerable (and understandable) agonising by Gogol. All that remains are fragments and a description of parts of the work in the journal of a friend to whom it had been read. It is clear that the destruction deprived us of some remarkable writing, especially given the quality and breadth of the first part, which Gogol considered to contain his best work. He must have been very sure that the arguments of the priest were right, for them to overcome his emotional attachment to what he had created. Indeed, the attachment was abnormally strong in this particular case: the fasting which brought Gogol's death only weeks after the destruction was motivated by the feeling that he could only really write about the reformation of Chechikov if he reformed himself too.
Gogol's writing is considerably more satirical than that of the other major Russian writers of the nineteenth century, and what is left of Dead Souls consists of a series of portraits making fun of provincial Russia, particularly of the stupidity of the small scale landowner. (And, in fact, I've now realised that I missed part of the point - these nobles are the truly "dead souls" in the novel.) These are written in a knowing way, with Gogol continually addressing a reader (as when, for example, he ridicules the fashionable habit of using a great deal of French by first describing the habit as admirable and then saying that it has no place in a Russian novel so that such phrases will be translated into that language). It is a novel full of humour, not at all a quality normally associated with Russian fiction, and would be a classic even without the strange history associated with it.
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