In this passage Hawthorne suggests that the human heart, once freed from Falsehood, would shine with the purity of a diamond. As the story suggests, Falsehood can be defeated by acts of unconditional charity or Love.
"It is a pretty tale," said Miss Pemberton, who, conscious that her praise was to that of all others as a diamond to a pebble, was therefore the less liberal in awarding it. "It is really a pretty tale, and very proper for any of the Annuals. But, Edward, your moral does not satisfy me. What thought did you embody in the ring?"
"O Clara, this is too bad!" replied Edward, with a half-reproachful smile. "You know that I can never separate the idea from the symbol in which it manifests itself. However, we may suppose the Gem to be the human heart, and the Evil Spirit to be Falsehood, which, in one guise or another, is the fiend that causes all the sorrow and trouble in the world. I beseech you to let this suffice."