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The plot is set is the city of Ephesus. The play opens with a conversation between Egeon, an old merchant from Syracuse, and Solinus, the Duke of Ephesus. In this conversation, Egeon reveals to the Duke the story of a fateful shipwreck, which provides necessary Background Information to the play.
The opening lines make it clear that the states of Syracuse and Ephesus have been at variance, and that, according to the law, any merchant from Syracuse seen in the city of Ephesus is to be put to death unless he can pay a thousand marks by way of ransom, in order to save his life. During the dialogue that follows, the Duke questions Egeon about his reasons for venturing into Ephesus, knowing well that death lurked around the corner. Egeon, being thus prompted by the Duke, relates the history of his life to him.
The Duke learns of the sad state of affairs that has brought Egeon to Ephesus in search of his family. Egeon begins his story at his birth. He says that he was born in Syracuse and brought up to become a merchant. Upon approaching the age of marriage, he was married to a fine lady, with whom he lived happily, until urgent business obliged him to go across to Epidamnum. Once there he realized he was to be detained for a long time; therefore, he sent for his wife. Shortly after her arrival she delivered two baby boys who were identical twins. Ironically, at that very same time, a poor woman living in the same inn as Egeon and his wife also delivered a set of identical twin boys. Since their parents were exceedingly poor, Egeon brought up the two boys, with the intention of raising them to become valets to his own two sons.
His son, on turning eighteen years of age, left home with his attendant to search for his mother and twin. According to Egeon, that was seven years ago, and he himself has been traveling for the past five years in the hope of being reunited with his family. The duke, having learned of Egeon's misfortunes, takes pity on him. Though he cannot freely pardon him, he grants Egeon until the end of the day to collect the money to pay the fine; if he fails he is doomed to death.