Judging the truth of stories is like judging the truth of a portrait drawing by Holbein. We never saw any of the people in those portraits he did of people in the court of Henry VIII. We don't have any facts to compare them to. We don't have anything to compare the people in Jane Austen's novels to, either. And yet we believe them. And it is not hard to imagine in either case that another artist or writer, marshalling many more facts about the subjects, could still make a portrait or a character that is not accurate in spite of their inclusion of all those facts. When, for example, also, it came out that the writer James Frey had made up some of the material in his memoir about drug addiction, it was an instance of a double failure. He had to make his facts more "literary" by making up more sensational ones (his idea of literary, not mine) and at the same time he didn't want to write a book that was "merely literary." That the book was supposed to be factual was intended to give it weight that a merely literary book could not have. If he had conceptualized his facts truthfully--if he had judged them right, that is--he would not have needed to "embellish" them. And if he had understood the power of fictional imagining he would not have needed to try to boost the importance of the book by making it factual. Jane Austen didn't need to make Pride and Prejudice true to facts. She had to make it true to imagination, to how we conceptualize experience and represent it to ourselves. A novel, a story, is an representation of experiencing. This is a big work because we live inside our conceptualization of experience; we don't actually live inside of a stack of facts. To the question how do we know whether a story is told for the purpose of manipulation or truth-telling, well, we have about two thousand years of literature, experience of reading and experience of writing and storytelling, and that is what we used to learn it from until in the 20th century we began, for various reasons, to think that literature was 1) propaganda; 2) evidence of psychosis; or 3) a pastime for self-indulgent dilletantes. It continues to exist though, and if you read enough of it, and you think about it, hard, you get judgment, for which there is no formula. And in story telling, anything written to a formula is likely to show it, like the bolts sticking out of the side of Frankenstein's neck, no matter how noble the intentions with which it was summoned forth.