chapter 53-54 moby dick
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The story serves a significant purpose by introducing the Moby Dick as a threatening, tangible presence without actually placing the whale in direct conflict with the Pequod. The means by which Melville does this is jarring, subverting the expectations of the reader by framing the story originally in terms of the conflict between Radney and Steelkilt and ending it with the horrific story of Radney's death at the hands of Moby Dick.
It is important to note the setting of the story. Ishmael does not tell the story as it was told to him by the crew of the Town-Ho; rather, he tells the story as he told it from the Golden Inn in Spain after his voyage on the Pequod is complete. This serves as an explicit reminder that Ishmael survives his voyage on the Pequod and is telling the story from a perspective far removed from the actual voyage. By highlighting this dramatic aspect of the story, Melville further moves the narrative away from Ishmael, whose fate is certain, and focuses it on the more flexible fates of Ahab and his crew.