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The narrator describes some of the unusual aspects of the hierarchy on board whaling ships.
In the past, Dutch whaling ships had two commanders, a captain who ran the ship itself, and a "specksynder" who was like a chief harpooneer.
The importance of the harpooneers on a whaling voyage has always meant that there was an "extra" class of people on a whaling ship (as compared to other ships).
Harpooneers usually get living quarters with the officers, because where you live on the ship is the main way of distinguishing officers from crew.
Even though whaling ships usually go on long voyages and they feel a little bit more democratic because everyone’s in it together to make a profit, discipline usually isn’t relaxed. Captains are usually proud and distant.
Captain Ahab doesn’t require anything harsher than strict obedience (he doesn’t make people take off their shoes before stepping on the quarter-deck, like some captains), but he’s still terrifying and has complete authority.
It’s also obvious, the narrator says, that sometimes Ahab abuses the forms and ceremonies allowed to captains for his own devious ends. After all, forms and ceremonies can even make idiot kings like Russia’s Czar Nicholas I into authority figures.
Ahab, of course, isn’t a king, just a Nantucket whaling captain, and so most of his grandeur has to come from something less concrete.