Reading through the dialogue at the literal level, we will find there will be difficulty in understanding this dialogue because some words become important as their meaning cannot be identified. However, if we try to interpret them in their contexts, not only the meaning of the words but also of the dialogue can be well explained. The notion context is essential to the pragmatic study of language. It is generally considered as constituted by the knowledge shared by the speaker and the hearer. Various components of shared knowledge have been identified, e. g. knowledge of the language they use, knowledge of what has been said before, knowledge about the world in general, knowledge about the specific situation in which linguistic communication is taking place, and knowledge about each other. Context determines the speaker’s use of language, and also the hearer’s interpretation of what is said to him. In this dialogue, the problem appears in the last two lines-“The?” “The” is a definite article, and its literal meaning in dictionary does not help a lot. And the direct context doesn’t offer sufficient evidence to infer the meaning. We cannot figure out what “The” refers to until we read to almost half of the novel. It refers to Madeira wine. The context covers a large scope. And as for Captain Cuttle and Mr. Gills, they share the knowledge of that specific situation so that Mr. Gills can understand what Captain Cuttle means by a simple word.