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Uncharacteristically, Stevens does not open this section of the novel in the present; he instead immediately tells about the one overt instance of anti- Semitism at Darlington Hall. He says that Lord Darlington came under the influence of Mrs. Carolyn Barnet, a member of the blackshirts organization, the British Union of Fascists. Stevens states that it was during these few weeks in the early 1920s, when Lord Darlington saw Mrs. Barnet frequently, that he decided to fire two Jewish maids.
Stevens tells Miss Kenton of Lord Darlington's decision to fire the maids that night over cocoa, during one of the customary end-of-day meetings he and she have instituted to discuss the day's events (meetings Stevens claims were merely professional in nature). Although Stevens is personally opposed to the decision to dismiss the Jewish maids because they have been excellent workers, he does feel it is his place to question Lord Darlington's decision, even in the privacy of his discussion with Miss Kenton. Miss Kenton cannot believe Stevens's indifferent attitude. She says it is wrong to dismiss the maids solely because they are Jewish, and she claims that she also will quit if the two are fired.
A year later, Miss Kenton is ashamed to admit that it was mere fright that kept her from quitting her post at Darlington Hall: she had nowhere else to go. After this admission, Stevens tells Miss Kenton that Lord Darlington has recently repented about firing the maids, and has asked Stevens to try and trace them. Stevens tells Miss Kenton that he thought she would like to know of this development because the firing had distressed her as much as it had distressed him. Miss Kenton is astounded and upset that Stevens never told her the firings had bothered him at all. She says to him: "Why, Mr. Stevens, why, why, why do you always have to pretend?" Stevens is unable to answer.
A housemaid named Lisa is hired to fill the staff shortage that results from the firing of the two Jewish maids. Stevens does not think Lisa will do a good job, as her references are dubious, but Miss Kenton is determined to prove him wrong. Lisa's behavior, though unpromising at first, improves greatly after several weeks, and Stevens admits that Miss Kenton has had "modest success" in reforming the new employee. Miss Kenton notes the "guilty smile" on Stevens's face as he says this, and tells him that she has noticed he always seems averse to having pretty women such as Lisa on the staff at Darlington Hall. Miss Kenton suggests that perhaps Stevens does not want attractive women on the staff because he feels he cannot trust himself. Stevens, of course, denies Miss Kenton's teasing accusation.
After a period of eight or nine months, Lisa runs off with the footman. Miss Kenton is very distraught, and says that Stevens is proved right in the end after all. Stevens disagrees, however, and says that Miss Kenton did a fine job training Lisa, and that such elopement is not uncommon among staff. The two agree that Lisa made a foolish decision in giving up her professional promise for a mere romance.
Stevens thinks about why his relationship with Miss Kenton underwent such a change around 1935 or 1936. He muses over various events that may have represented turning points. One such episode was a night when Miss Kenton came into Stevens's pantry without knocking and, noticing him reading, asked him what book it was. Stevens clutched the book to his chest and asked that Miss Kenton respect his privacy. She persevered, however, suggested that perhaps it was something "rather racy," and finally approached him and pried it out of his fingers very slowly. Miss Kenton exclaimed that the book was not anything but a sentimental love story. Stevens shows her out of his room.
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