He was the third of seven children born to former Union soldier and harness-maker Irwin McLain and Emma Jane Anderson (née Smith).
He became a writer in 1912, after suffering a nervous breakdown and wandering around Cleveland for four days. His prose style was direct and unpretentious, and he was one of the first authors to incorporate the modern psychological theories of Freud into his work. He was a major influence on the generation of American writers that followed him, including Hemingway and Faulkner, although they both eventually turned against him. Anderson encouraged Faulkner in his writing aspirations, and he who wrote young Hemingway a letter of introduction to take with him to Paris, helping put him in touch with Stein and other American ex-pats. For her part, Stein called Anderson "a much more original writer than Hemingway." Anderson is best known for his short-story cycle Winesburg, Ohio (1919), a portrait of life in a small Midwestern town. He also wrote a best-selling novel, Dark Laughter (1925).
He married three times.
Anderson died on March 8, 1941, at the age of 64, taken ill during a cruise to South America.
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