This expression is used to describe a situation in which people are afraid to criticize someone because the perceived wisdom is that the person is good or important.
The expression comes from a short story by Danish author Hans Christian Andersen; it was first published in Copenhagan in April 1837 in Anderson's third and final installment of Fairy Tales Told for Children.
Anderson's version of the tale is based on a German translation of a story first published in 1335 by Spaniard Juan Manel, Prince of Villena: Libro de los ejemplos del conde Lucanor y de Patronio (Book of the Examples of Count Lucanor and of Patronio). Manel attributed his collection of 51 cautionary tales to various sources including Aesop, other classical writers and Arabic folktales.
Anderson's story differs from Manel's in that the latter has the king hoodwinked by weavers who claim that the suit of clothes can only be seen by men of legitimate birth; in Anderson's story, the weavers play on the emperor's vanity by saying the suit is only visible to people who are clever and competent.
Manel's version is similar to one in Indian literature; the earliest known reference being in an anthology of fables from 1052 that tells of a dishonest merchant who swindles the king by pretending to weave a supernatural garment that cannot be seen or touched by any person of illegitimate birth.
You can read the complete works of Hans Christian Anderson, including The Emperor's New Clothes, at The Hans Christian Anderson Centre.
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