The book's protagonist, Stephen Gordon, is born in the late Victorian era to upper-class parents in Worcestershire who are expecting a boy and who christen her with the boy's name they had already chosen. Even at birth she is physically unusual, a "narrow-hipped, wide-shouldered little tadpole of a baby". As a girl she hates dresses, wants to cut her hair short, and longs to be a boy. At seven, she develops a crush on a housemaid named Collins, and is devastated when she sees Collins kissing a footman.
Stephen's father, Sir Phillip, dotes on her; he seeks to understand her through the writings of Karl Heinrich Ulrichs, the first modern writer to propose a theory of homosexuality, but does not share his findings with Stephen. Her mother, Lady Anna, is distant, seeing Stephen as a "blemished, unworthy, maimed reproduction" of Sir Phillip. At eighteen, Stephen forms a close friendship with a Canadian man, Martin Hallam, but is horrified when he declares his love for her. The following winter, Sir Phillip is crushed by a falling tree; at the last moment he tries to explain to Lady Anna that Stephen is an invert, but dies without managing to do so.
Stephen begins to dress in masculine clothes made by a tailor rather than a dressmaker. At twenty-one she falls in love with Angela Crossby, the American wife of a new neighbor. Angela uses Stephen as an "anodyne against boredom", allowing her "a few rather schoolgirlish kisses". Then Stephen discovers that Angela is having an affair with a man. Fearing exposure, Angela shows a letter from Stephen to her husband, who sends a copy to Stephen's mother. Lady Anna denounces Stephen for "presum[ing] to use the word love in connection with ... these unnatural cravings of your unbalanced mind and undisciplined body." Stephen replies, "As my father loved you, I loved ... It was good, good, good – I'd have laid down my life a thousand times over for Angela Crossby." After the argument, Stephen goes to her father's study and for the first time opens his locked bookcase. She finds a book by Krafft-Ebing – assumed by critics to be Psychopathia Sexualis , a text about homosexuality and paraphilias– and, reading it, learns that she is an invert.
Stephen moves to London and writes a well-received first novel. Her second novel is less successful, and her friend the playwright Jonathan Brockett, himself an invert, urges her to travel to Paris to improve her writing through a fuller experience of life. There she makes her first, brief contact with urban invert culture, meeting the lesbian salon hostess Valérie Seymour. During World War I she joins an ambulance unit, eventually serving at the front and earning the Croix de Guerre. She falls in love with a younger fellow driver, Mary Llewellyn, who comes to live with her after the war ends. They are happy at first, but Mary becomes lonely when Stephenreturns to writing. Rejected by polite society, Mary throws herself into Parisian nightlife. Stephen believes Mary is becoming hardened and embittered and feels powerless to provide her with "a more normal and complete existence".
Martin Hallam, now living in Paris, rekindles his old friendship with Stephen. In time, he falls in love with Mary. Persuaded that she cannot give Mary happiness, Stephen pretends to have an affair with Valérie Seymour to drive her into Martin's arms. The novel ends with Stephen's plea to God: "Give us also the right to our existence!"
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