"The N Word"

In today's viewing of Unforgiven I noticed something very peculiar (not so much anymore because Mr. Bennett had to point it out to the whole class). When Ned and the Schofield Kid have an argument about the Schofield Kid's poor vision, I was almost sure that the Kid was going to call Ned "the n word" but he didn't. The Schofield Kid seems like the ignorant type who would say something like that, and it looked like the conversation was going that way. Maybe Schofield is above racism or something, or there is more to the character that we will find out about later. Maybe it was a statement about the West how racism wasn't as rampant there as it was in the South. I don't know, maybe it will show up later on in the film.