Q: Should “Mr.” be spelled out when it is quoted? For example: “Mr. Jones went to town,” she said. Or: “Mister Jones went to town,” she said.
A: I’d use the abbreviated version before a name, whether it’s quoted or not, but I’d spell out the word when it stands alone in a sentence: “Hey, mister, what are you doing?” he yelled.
I’m not at all bothered, though, when I see the courtesy title spelled out, especially for comic effect in literary writing.
In fact, the title was spelled out for hundreds of years after it first showed up in English in the early 16th century, according to published references in the Oxford English Dictionary.
The first OED citation is a 1523 entry from a ledger in Canterbury: “Paied to a carpenter by grete for mending of Myster Collettis house.”
The abbreviated version didn’t appear until the mid-19th century. The earliest citation in the OED is from Robert S. Surtees’s comic novel Mr. Sponge’s Sporting Tour (1853).
Although both versions have been around for quite some time, the OED says the courtesy title “is now usually written in its abbreviated form, and tends only to be given in full in cases where some humorous or ironic emphasis is intended.”
Here’s a humorous example from the Dickens novel Nicholas Nickleby (1839): “Yes; and indeed and indeed again, Mister Jackanapes,” said the excited lady.
Back to your question. I’d recommend the abbreviated version (“Mr. Jones went to town,” she said), and The Chicago Manual of Style seems to agree with me, though it doesn’t deal specifically with the question of quotations.
The Chicago Manual says “Mr.” should be abbreviated in front of a name, whether a full name or just a last name. It adds, however, that when the title “is used without a name, in direct address, it is spelled out.”
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