Analysis
The "realms of gold" in the opening line seem to imply worldly riches, until the name of Homer appears; then they are recognized as literary and cultural realms. Of the many islands of the Aegean, the one which bards most in fealty owe to Apollo, leader of the inspiring Muses, is Delos, the sacred island that was Apollo's birthplace. The island-dotted Aegean lies at the eastern end of the Mediterranean; thus when Keats refers to the "western islands" of his own experience, he tacitly contrasts them with the East Indies, the goal that drew adventurers like doughty Cortéz and Balboa to the New World, an example of submerged imagery behind the text, which is typical of Keats' technique.
The second quatrain introduces "one wide expanse" that was ruled by Homer, but which was "heard of" rather than known to Keats at first-hand, for Homer wrote in Greek, and Keats, like most cultured Englishmen of his time, was at ease only in Latin. The "wide expanse" might have been a horizon of land or sea, but in Keats' breathing its "pure serene", we now sense that it encompasses the whole atmosphere, and in it Chapman's voice rings out. This sense of fresh discovery brings the reader to the volta: "Then felt I...".
The "new planet" was Uranus, discovered in 1781 by Sir William Herschel, Astronomer Royal to George III, the first planet unknown to astronomers of Antiquity. It was a new world in the heavens.
In point of historical fact, it was Vasco Núñez de Balboa's expedition which were the first Europeans to see the Pacific, but Keats chose to focus on Hernán Cortés; "Darien" refers to the Darién province of Panama. Keats had been reading William Robertson's History of America and apparently conflated two scenes there described: Balboa's finding of the Pacific and Cortés's first view of the Valley of Mexico. The Balboa passage: "At length the Indians assured them, that from the top of the next mountain they should discover the ocean which was the object of their wishes. When, with infinite toil, they had climbed up the greater part of the steep ascent, Balboa commanded his men to halt, and advanced alone to the summit, that he might be the first who should enjoy a spectacle which he had so long desired. As soon as he beheld the South Sea stretching in endless prospect below him, he fell on his knees, and lifting up his hands to Heaven, returned thanks to God, who had conducted him to a discovery so beneficial to his country, and so honourable to himself. His followers, observing his transports of joy, rushed forward to join in his wonder, exultation, and gratitude" (Vol. III).
John Keats simply remembered the image, rather than the actual historical facts. Charles Clarke noticed the error immediately, but Keats chose to leave it in, presumably because historical accuracy would have necessitated an unwanted extra syllable in the line.
In retrospect, Homer's "pure serene" has prepared the reader for the Pacific, and so the analogy now expressed in the simile that identifies the wide expanse of Homer's demesne with the vast Pacific, which stuns its discoverers into silence, is felt to be the more just.
Keats altered "wondr'ing eyes" (in the original manuscript) to "eagle eyes", and "Yet could I never judge what Men could mean" (which was the seventh line even in the first publication in The Examiner) to "Yet did I never breathe its pure serene".
Read more about this topic: On First Looking Into Chapman's Homer
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