The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.
Fitzgerald presents intellectual ability as the capacity to recognise conflicting possibilities without becoming paralysed by the contradiction. His example is the ability to judge a situation as hopeless while still acting as though improvement remains possible. The emphasis is therefore not simply on intelligence as knowledge, but on a form of thinking that can accommodate tension, ambiguity and uncertainty.
In the wider passage, Fitzgerald connects this capacity with his earlier confidence in effort and personal agency. He recalls believing that apparently impossible outcomes could become real through intelligence and determination. The quotation does not suggest that opposing ideas must be reconciled or that both are equally true. Instead, it describes an ability to keep conflicting assessments in view while continuing to think and act. In this sense, the quotation concerns cognitive flexibility: functioning without reducing a complicated situation to a single, comfortable conclusion.
Full quotation
“Before I go on with this short history, let me make a general observation—the test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function. One should, for example, be able to see that things are hopeless and yet be determined to make them otherwise. This philosophy fitted on to my early adult life, when I saw the improbable, the implausible, often the "impossible," come true. Life was something you dominated if you were any good. Life yielded easily to intelligence and effort, or to what proportion could be mustered of both. It seemed a romantic business to be a successful literary man—you were not ever going to be as famous as a movie star but what note you had was probably longer-lived; you were never going to have the power of a man of strong political or religious convictions but you were certainly more independent. Of course within the practice of your trade you were forever unsatisfied—but I, for one, would not have chosen any other.”