Set there immoveable: an altar
Where he expends himself in shape and music.
This is showing how the blacksmith himself views his work. He calls the anvil an “altar” which supports a religious affiliation in his view. Where he “expends himself in shape and music” further strengthens this religious nature.
It is reminiscent of some kind of ritual in which the participants glorify whatever is upon the altar. In this case the item that is being glorified is the blacksmith’s work and the altar is the anvil. The blacksmith sees his work as something that is highly valuable and should be revered.
The poem is as much about the forging of poetry (a la Yeats' “Byzantium”) as the details of the blacksmith’s work (though it is certainly about that as well).
The smith is a poet (“maker” in ancient Greek); the act of making has music, and the thing made takes a shape—in this case, a sonnet-shape. Its music is a sort of onomatopoeia of sound and sense: the “short-pitched ring,” the “hiss” of the shoes, the way that “unpredictable fantail of sparks” snaps and crackles in the mouth. Creating such effects is how the poet expends himself.
The forge is the mind, with its memories & sense of history; the anvil-altar, where the poet-smith labors and worships, is language. What saves the poem from mere allegory is accurate detail and palpable imagery, which make it a rich and resonant parable of creation.
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