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I find myself using these two constructions:

I am digging a hole using a spade.


I am digging a hole with a spade.

Which one is correct, or can they be used both?

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They are both correct, but using is a little less colloquial. – bib Mar 6 '14 at 14:18
Using is precise, whereas with marks the instrumental nature of noun phrase conventionally. No real difference in use or meaning. Probly depends more on whether the speaker wanted an extra syllable. Using in this kind of construction is essentially a preposition. – John Lawler Mar 6 '14 at 15:07

They are largely interchangeable, but using a spade would be more specific. With has very many uses, and depending on the context, there is room for ambiguity.

Consider, for example, this sentence:

I am driving there with my old car.

The most common interpretation is that the old car is the means by which I am driving; I am using my old car to drive there. But I could also use this sentence to describe a scenario where I am driving in my new car, and my brother-in-law driving in the old car alongside me. In Latin, we could easily distinguish the two by using an ablative of instrument in the first case and an ablative of accompaniment in the second case, but alas, we are using English.

Among other things, we can also use with to introduce absolutes (with the sun fading, with the market turmoil), to indicate manner (ran with great urgency, cooked with butter), to describe a quality or condition (the house with the red door, looks taller with the new haircut), and to state a cause (wet with rain). So while with is natural in conversational English, in more formal communication such as technical writing or requirements documents, I try to use more explicit wording. You'd be amazed at the number of ways display a slideshow with product logos can be interpreted.

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Both are grammatically correct. I would recommend 'with' over 'using' as it reveals a higher involvement of the person involved in the activity. It seems to be more apt.

Another example,

I am writing this with my pen. // is definitely more 'friendly' than saying

I am writing this using my pen.

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For formal written English,

I am digging a hole with a spade is the correct usage.

For random conversations,

I am digging a hole using a spade would suffice.

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But there is absolutely nothing wrong with saying 'I am digging a hole using a spade'. It could be helpful if someone had accused you of using a valuable sceptre, which you had stolen from the Crown Jewels, to dig your garden. 'No, I dug the hole using a spade'. – WS2 Mar 6 '14 at 13:02
Whereas "I ordered a spade to dig the hole" can be interpreted as very, very wrong on several levels. Better use a shovel to avoid risks. – oerkelens Mar 6 '14 at 13:09
There is a difference between written language and spoken language. I think that's what the fact is here. 'With a spade' is correct formal written English. 'Using a spade' is fine in conversation. – Babbzzz Mar 6 '14 at 13:28
Please give some documentation on this – mplungjan Mar 6 '14 at 13:46
'Using a spade' sounds more formal, 'with a spade' more informal, to me. – Edwin Ashworth Mar 6 '14 at 13:55

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