[. . . ] [T]he word must signify, besides the more obvious qualities of the picturesque and the heroic, an assumed freedom from the ordinary novelistic requirements of verisimilitude, development, and continuity; a tendency towards melodrama and idyl; a more or less formal abstractness and, on the other hand, a tendency to plunge into the underside of consciousness; a willingness to abandon moral questions or to ignore the spectacle of man in society, or to consider these things only indirectly or abstractly (ix).

Doubtless the main difference between the novel and the romance is in the way in which they view reality. The novel renders reality closely and in comprehensive detail. It takes a group of people and set them going about the business of life. We come to see these people in their real complexity of temperament and motive. They are in explicable relation to nature, to each other, to their social class, to their own past. Character is more important than action and plot, and probably the tragic or comic actions of the narrative will have the primary purpose of enhancing our knowledge of and feeling for an important character, a group of characters, or a way of life. The events that occur will usually be plausible, given the circumstances, and if the novelist includes a violent or sensational occurrence in his plot, he will introduce it only into such scenes as have been (in the words of Percy Lubbock) "already prepared to vouch for it." Historically, as it has often been said, the novel has served the interests and aspirations of an insurgent middle class (12).

By contrast the romance, following distantly the medieval example, feels free to render reality in less volume and detail. It tends to prefer action to character, and action will be freer in a romance than in a novel, encountering, as it were, less resistance from reality. (This is not always true, as we see in what might be called the static romances of Hawthorne, in which the author uses the allegorical and moral, rather than the dramatic, possibilities of the form.) The romance can flourish without providing much intricacy of relation. The characters, probably rather two-dimensional types, will not be complexly related to each other or to society or to the past. Human beings will on the whole be shown in an ideal relation--that is, they will share emotions only after these have become abstract or symbolic. To be sure, characters may become profoundly involved in some way, as in Hawthorne or Melville, but it will be a deep and narrow, an obsessive, involvement. In American romances it will not matter much what class people come from, and where the novelist would arouse our interest in a character by exploring his origin, the romancer will probably do so by enveloping it in mystery. Character itself becomes, then, somewhat abstract and ideal, so much so in some romances that it seems to be merely a function of plot. The plot we may expect to be highly colored. Astonishing events may occur, and these are likely to have a symbolic or ideological, rather than a realistic, plausibility. Being less committed to the immediate rendition of reality than the novel, the romance will more freely veer toward mythic, allegorical, and symbolistic forms. --Richard Chase, The American Novel and Its Tradition (13)
 

Nathaniel Hawthorne, "The Custom-House" (preface to The Scarlet Letter)

The same torpor, as regarded the capacity for intellectual effort, accompanied me home, and weighed upon me, in the chamber which I most absurdly termed my study. Nor did it quit me when, late at night, I sat in the deserted parlour, lighted only by the glimmering coal-fire and the moon, striving to picture forth imaginary scenes, which, the next day, might flow out on the brightening page in many-hued description.
If the imaginative faculty refused to act at such an hour, it might well be deemed a hopeless case. Moonlight, in a familiar room, falling so white upon the carpet, and showing all its figures so distinctly,—making every object so minutely visible, yet so unlike a morning or noontide visibility,—is a medium the most suitable for a romance-writer to get acquainted with his illusive guests. There is the little domestic scenery of the well-known apartment; the chairs, with each its separate individuality; the centre-table, sustaining a work-basket, a volume or two, and an extinguished lamp; the sofa; the book-case; the picture on the wall;—all these details, so completely seen, are so spiritualized by the unusual light, that they seem to lose their actual substance, and become things of intellect. Nothing is too small or too trifling to undergo this change, and acquire dignity thereby. A child’s shoe; the doll, seated in her little wicker carriage; the hobby-horse;—whatever, in a word, has been used or played with, during the day, is now invested with a quality of strangeness and remoteness, though still almost as vividly present as by daylight. Thus, therefore, the floor of our familiar room has become a neutral territory, somewhere between the real world and fairy-land, where the Actual and the Imaginary may meet, and each imbue itself with the nature of the other. Ghosts might enter here, without affrighting us. It would be too much in keeping with the scene to excite surprise, were we to look about us and discover a form, beloved, but gone hence, now sitting quietly in a streak of this magic moonshine, with an aspect that would make us doubt whether it had returned from afar, or had never once stirred from our fireside.

The somewhat dim coal-fire has an essential influence in producing the effect which I would describe. It throws its unobtrusive tinge throughout the room, with a faint ruddiness upon the walls and ceiling, and a reflected gleam from the polish of the furniture. This warmer light mingles itself with the cold spirituality of the moonbeams, and communicates, as it were, a heart and sensibilities of human tenderness to the forms which fancy summons up. It converts them from snow-images into men and women. Glancing at the looking-glass, we behold—deep within its haunted verge—the smouldering glow of the half-extinguished anthracite, the white moonbeams on the floor, and a repetition of all the gleam and shadow of the picture, with one remove farther from the actual, and nearer to the imaginative. Then, at such an hour, and with this scene before him, if a man, sitting all alone, cannot dream strange things, and make them look like truth, he need never try to write romances.

 William Gilmore Simms
The Romance is of loftier origin than the Novel. It approximates the poem. It may be described as an amalgam of the two. . . . The standards of the Romance . . . are very much those of the epic. It invests individuals with an absorbing interest--it hurries them rapidly through crowding and exacting events, in a narrow space of time--it requires the same unities of plan, of purpose, and harmony of parts, and it seeks for its adventures among the wild and wonderful. It does not confine itself to what is known, or even what is probable. It grasps at the possible; and placing a human agent in hitherto untried situations, it exercises its ingenuity in extricating him from them, while describing his feelings and his fortunes in the process.(From William Gilmore Simms's prefatory letter to The Yemassee, quoted in Chase, The American Novel and Its Tradition, p. 16)(Portrait of William Gilmore Simms courtesy of the National Portrait Gallery.)

See also G. R. Thompson and Eric Carl Link's Neutral Ground: New Traditionalism and the American Romance Controversy (Baton Rouge, LA: Louisiana State UP, 1999) and Winfried Fluck's"'The American Romance' and the Changing Functions of the Imaginary" (New Literary History 27.3 [1996]: 415-57).

The Gothic novel, or "Gothic romance" . . . flourished through the early nineteenth century. Authors of such novels set their stories in the medieval period, often in a gloomy castle replete with dungeons, subterranean passages, and sliding panels, and made plentiful use of ghosts, mysterious disappearances, and other sensational and supernatural occurrences; their principal aim was to evoke chilling terror by exploiting mystery, cruelty, and a variety of horrors. The term "gothic" has also been extended to denote a type of fiction which lacks the medieval setting but develops a brooding atmosphere of gloom or terror, represents events which are uncanny, or macabre, or melodramatically violent, and often deals with aberrant psychological states.  (adapted from A Glossary of Literary Terms)
 

Selections from Eve Kosofsky Sedgwick, The Coherence of Gothic Conventions 
When "an individual fictional self is the subject of one of these conventions, that self is spatialized in the following way.

It is the position of the self to be massively blocked off from something to which it ought normally to have access. This something can be its own past, the details of its family history; it can be the free air, when the self has been literally buried alive; it can be a lover; it can be just all the circumambient life, when the self is pinned in a death-like sleep. 

Typically, however, there is both something going on inside the isolation (the present, the continuous consciousness, the dream, the sensation itself) and something intensely relevant going on impossibly out of reach. While the three main elements (what's inside, what's outside, and what separates them) takes on the most varied guises, the terms of the relationship are immutable. 

The self and whatever it is that is outside have a proper, natural, necessary connection to each other, but one that the self is suddenly incapable of making.The inside life and the outside life have to continue separately, becoming counterparts rather than partners, the relationship between them one of parallels and correspondences rather than communication. 

This, though it may happen in an instant, is a fundamental reorganization, creating a doubleness where singleness should be . 

And the elements there are to go to reintegrate the sundered elements-finally, the impossibility of restoring them to their original oneness-are the most characteristic energies of the Gothic novel. 

The worst violence, the most potent magic, and the most paralyzing instances of the uncanny in these novels do not occur in, for example, the catacombs of the Inquisition or the stultification of nightmares. Instead, they are evoked in the very breach of the imprisoning wall. The fires, earthquakes, and insurrections that restore the prisoners of tyranny to their "natural" freedom are tremendously more violent than what has gone on either inside or outside the prisons. 

Similarly, no nightmare is ever as terrifying as is waking up from some innocuous dream to find it true. The barrier between the self and what should belong to it can be caused by anything and nothing; but only violence or magic, and both of a singularly threatening kind, can ever succeed in joining them again. 

Of all the Gothic conventions dealing with the sudden, mysterious, seemingly arbitrary, but massive inaccessibility of those things that should normally be most accessible, the difficulty the story has in getting itself told is of the most obvious structural significance. 

If the story-within-etc. represents the broadest structural application of the otherwise verbal or thematic convention of the unspeakable, it has a similar relation to the convention of live burial . . . . The live burial that is a favorite conventual punishment in Gothic novels derives much of its horror not from the buried person's loss of outside activities (that would be the horror or dead burial) , but from the continuation of a parallel activity that is suddenly redundant. 

For more information and texts, visit Jack Voller's Literary Gothic site. 
See also the hypertext anthology compiled for ENEC 981: The Novel of Sensibility at the University of Virginia.