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Editor Antonio Fici
The Law of Third Sector Organizations in Europe
Foundations, Trends and Prospects
Editor
Antonio Fici
Department of History, Cultural Heritage, Education and Society, University of Rome Tor Vergata, Rome, Italy
ISBN 978-3-031-41743-6 e-ISBN 978-3-031-41744-3 https://doi.org/10.1007/978-3-031-41744-3
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023
This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, speci ically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on micro ilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a speci ic statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional af iliations.
This Springer imprint is published by the registered company Springer Nature Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Foreword
The subject of this volume—the law of the third sector organizations in Europe—is particularly topical and relevant today. In 2022, when the Terzjus Foundation—at the initiative of its scienti ic director professor Antonio Fici— irst conceived the idea of this work, the relevance that an analysis of the legislation on third sector organizations could have with regard to the orientation of the policies of the European Union was not really clear.
Up until that point, the Foundation had primarily focused its efforts on the preparation of a report on the situation and evolution of the law of the third sector in Italy, taking the important legislative reform introduced in 2017 as its starting point. That met with and, indeed, continues to meet with the original mission of Terzjus: to be a centre for the study, research, monitoring and proposal of policies regarding the law in the third sector, providing a service to the typical stakeholders (associations, foundations, social enterprises and cooperatives), as well as supporting the positive evolution of the practices of the public administrations, and, inally, contributing to the positive evolution of the relevant legislation.
The original structure which led to the creation of the Terzjus Foundation—which is composed of networks of Italian third sector organizations, large philanthropic foundations, public bodies and professional associations, with the support of a highly skilled Scienti ic Committee—has enabled the Foundation to draw from a wealth of academic, professional and operational knowledge as it carries out its research.
The positive response given to the Terzjus report on Italian third sector law has encouraged the Foundation to set its sights on the European level, which is also a perspective that is clearly speci ied in its own statutes.
This gave rise to the idea of devising a study to analyse ten different cases of legislation on third sector organizations at national level and three transversal contributions dedicated to a comparison of the 10 national cases and overview of European legislation; a comparison with the experience in the United States; and, inally, a deep dive into the
barriers and incentives for the development of European philanthropy, written by the secretary general of Terzjus Gabriele Sepio.
The preparation of this work coincided with the adoption, in December 2021, of an “Action plan for the social economy”, which was introduced by the EU at the initiative of Commissioner Nicolas Schmit and, more recently, with the European Commission’s proposal of a recommendation which aims to ensure that the Member States both develop and implement social economy policies designed to favour inclusion, employment and social innovation.
In this context, a comparative study of what is happening in the major EU countries can only help to develop a better and more up-todate identi ication of the actors which make up the diverse world of the third sector and of the social economy, in order to promote both its reinforcement and development within a Union framework that is less fragmented and more ef icient.
Furthermore, it is quite clear that the adoption of an “Action plan for the social economy”, as well as a recommendation, which presumably will be approved in November 2023 by the European Council of the EU Heads of State and of Government, constitutes important new elements in this area, as well as a turning point in Community policies which, thus far, had never fully recognized the importance and the speci ic nature of the social economy as a “third pillar” of our territorial, national and European communities.
Whilst hoping that this volume proves to be a useful tool in this context, it only remains for me to thank all of those who have contributed to this volume: the scienti ic director of Terzjus, Antonio Fici, for having conceived the idea and coordinating the work; the Banca Etica and the Fondazione Finanza Etica who have sponsored the initiative, thus enabling its realization; Fondazione AIRC for further funding; and, inally, Springer, the publisher, who, together with Giappichelli, kindly accepted our proposal to publish the volume.
The third sector is on the verge of a new era, and with this research work, the Terzjus Foundation has tried to contribute to the development of principles, orientations and policies so that it may become a key element in the lives of the citizens of Europe.
Luigi Bobba
Preface
This book deals with third sector organizations from a comparative legal perspective, and as such it is the irst of its kind. This is mainly due to the fact that third sector organizations are a relatively new category of organizations. It was irst conceptualized in the United States in the 1970s but was almost immediately confused with the more generic category of non-pro it organizations. This fact has not contributed to the development of the third sector. Non-pro it organizations are characterized by a solely negative element, the non-pro it purpose or pro it non-distribution constraint. In contrast, third sector organizations are quali ied in positive terms by the pursuit of a “social” or “worthy” purpose, which implies the performance of public bene it or general interest activities without a pro it aim. This book helps the reader to gain a clear understanding of the difference between simple non-pro it organizations and third sector organizations, thereby contributing to the conceptual autonomy of the latter from the former, notably from a legal point of view.
Third sector organizations are recognized by law, with this exact denomination, only in one European country, namely in Italy, where a Code of the Third Sector was enacted in 2017. However, the comparative legal analysis conducted in this book shows that organizations equivalent to Italian third sector organizations are provided for and regulated in almost all the EU countries. In particular, the category of public bene it organizations has the largest number of traits in common with that of third sector organizations. The fact that in many European countries public bene it organizations are regulated in tax law has circumscribed the knowledge thereof to small circles of practitioners and scholars. Public bene it organizations have, moreover, been largely ignored in the institutional debate, also at the European Union level, where other sector labels, such as “social economy entities” or “social enterprises”, have had more success. The situation seems now to be partially different. Just some weeks ago, the European Commission released a proposal for a recommendation on developing social economy framework conditions, accompanied by two staff working documents, one of which focuses on the public bene it status in the EU.
The above explains why this book comes at the right moment, precisely when economic, social and pandemic crises are leading national states and the European Union to provide greater visibility, better operational conditions and more sophisticated support measures in favour of organizations that may help public bodies to satisfy the needs of their citizens, communities and territories, which otherwise risk remaining unmet. Third sector organizations are allies of the State and merit even more attention than organizations oriented to making pro its for distribution to their owners. This now also seems to be clearer at the European Union level, as shown by the increased consideration given by EU institutions to this topic.
Being the irst of its kind, one of the main objectives of this book was to collect the diverse national experiences, make a irst comparison between them, and lay the foundations for further legal research in this ield. The variety of denominations, sources and features found at the national level meant that it was irst of all necessary to identify and describe the relevant legal framework on third sector organizations. This may justify a tone that at times is descriptive. But the book enables readers to now know what they have to seek and compare if they have an interest in third sector law.
The editor of this book wishes to thank all of the people and organizations that have contributed to its realization. First of all, the distinguished colleagues who have accepted to participate in this collective experience, hopefully the irst of a long series. Secondly, the Terzjus Foundation, an Italian third sector organization working on third sector law, of which I am honoured to serve as Scienti ic Director, for having promoted the research that led to this book, as well as the main sponsors of the initiative, Banca Etica and Fondazione Finanza Etica, for their inancial support without which this book would probably not have seen the light of day. Thanks also to the AIRC Foundation for additional funding and to our publishers, Giappichelli and Springer, for the interest shown in this new area of law by accepting to publish this book. Our hope is that the book may somehow contribute to the further development of all third sector organizations in Europe and beyond.
Antonio Fici Rome, Italy
Contents
Part I National Perspectives on the Law of Third Sector Organizations
1 The Third Sector in Belgium
Henri Culot and Joanne Defer
2 The Diversity of Third Sector Organisations in Denmark
Karsten Engsig Sørensen
3 French Economie Sociale et Solidaire in the Middle of the Ford
Veronique Magnier
4 Law in Transition: Reforming the Legal Framework of the Third Sector in Germany
Florian Moslein
5 Third Sector Organisations in Ireland: Assembling the Regulatory Jigsaw Pieces of an Evolving, If Fragmented, Sector
Oonagh B. Breen
6 The New Italian Code of the Third Sector. Essence and Principles of a Historic Legislative Reform
Antonio Fici
7 The Legal Infrastructure of the Third Sector and the Social Economy in the Netherlands
Ger J. H. van der Sangen
8 Third Sector in the Third Republic: An Overview of the Law and Practice in Poland
Arkadiusz Radwan, Marcin Mazgaj and Przemysław Zak
9 The Legal Regime of the Social Economy Sector in Portugal
Deolinda Meira
10 Social Economy and Third Sector in Spanish Law. Convergences and Divergences
Gemma Fajardo-Garcıa
Part II European and Comparative Law of Third Sector Organizations
11 Third Sector Organizations in a European and Comparative Legal Perspective
Antonio Fici
12 The Taxation of Social Economy Entities in the Perspective of EU Law
Gabriele Sepio
13 European Law of Third Sector Organizations from the US Standpoint
Dana Brakman Reiser
2 Historical Background
2.1 Summa Divisio Between Companies and Nonpro it Associations Prior to 1995
For a long time, the Belgian legal system either provided for instruments that were exclusively geared towards pro it-making, or for purely non-pro it purposes thereby theoretically ruling out any possibility for them to actively participate in the economy. The accredited cooperative company has been a notable exception since 1962 (see Sect. 6.2 below).
In this respect, our legal system was traditionally based on a summa divisio between commercial companies (société commerciale –handelsvennootschap) and non-pro it associations (association sans but lucratif – vereniging zonder winstoogmerk).2 Commercial companies were governed by the Napoleonic Code de Commerce and then later by the Lois coordonnees ‘sur les societes commerciales’ [Coordinated Laws on Commercial Companies] of 1935 (hereinafter, “CLCC”). Nonpro it associations were only granted legal personality after World War I, when their functioning was organized by the Law of 27 June 1921 ‘sur les associations sans but lucratif’ [concerning non-pro it associations].
The intention was to maintain a strict divide between the activities that could be exercised by companies and associations. As we shall see, this rigid summa divisio evolved over time towards a more lexible approach to the activities and purposes of these legal forms.
Under the Code de commerce and later the CLCC, commercial companies were pro it oriented. Article 1 CLCC provided that the purpose of a commercial company was to engage in commercial transactions (actes de commerce – daden van koophandel).
Commercial transactions were those listed by articles 2 to 3 of the Code of Commerce (Code de commerce—Wetboek van koophandel). They include the sale of merchandise, factories and manufacturers, banking, exchange and inance activities, and many more. Those operations were presumed to be conducted with the intention of making pro its.3 Agricultural activities, medical and para-medical professions, legal professions, such as lawyers and notaries, etc. were not considered as commercial activities. This comes from an older
tradition when these activities were deemed honourable for the upper classes and the nobility, were classi ied as civil activities and were supposed to be carried out without an intention of making pro its.4
Commercial activities could be carried out by individuals or by companies. In the latter case, the commercial company was intended to pursue a commercial activity that would generate pro its to be shared between its shareholders.5 The common intention of the shareholders to seek and share pro its was the very essence of a commercial company.
Until the end of World War I, non-pro it associations were neither legally recognised nor regulated. The underlying reason was the government’s fear that associations such as trade-unions, professional corporations, religious congregations or political associations could become powerful,6 as well as the related concern that they could, over time, build up large estates without ever paying inheritance tax.7
It took 90 years for the freedom of association enshrined in the Constitution since 1831 to be implemented with the Law of 27 June 1921 concerning non-pro it associations. This law provided that nonpro it associations were forbidden (i) to exercise a commercial or industrial activity and (ii) to provide their members with any material gain (article 1 of the Law of 27 June 1921). They were thus supposed to pursue a “disinterested purpose” (but désintéressé – belangeloos doel), conceived as a social mission of charitable, educational, cultural, folkloric, sanitary or other nature, excluding the enrichment of the members. Moreover, this goal was to be realised without engaging in commercial or industrial activities.8
The possibility for a non-pro it association to engage in an ancillary commercial activity was nonetheless foreseen by the preparatory legislative work and commonly admitted in practice,9 provided that it was necessary for the achievement of its disinterested purpose and that the generated pro its were solely allocated to the enhancement of this purpose (and not to the members of the association). However, the de initions of “necessary” and “ancillary” and their practical implications generated intense controversy in doctrine and case-law, as well as abuses in practice.10
Many non-pro it associations carried out commercial activities (almost) without any limit. This was a consequence of a judgment of the Court of Cassation in the case known as the “the priest’s swimming pool”,11 linking the de inition of commercial transactions to the intention of making pro it. A priest operated a swimming pool as part of the parish activities. The Court ruled that this activity could not be quali ied as commercial (although any other public swimming pool would be) because the priest did not seek to make pro its but rather to serve his community. More generally, the Court held that the activities enumerated by articles 2 to 3 of the Code of commerce were presumed to be carried out with an intention of making pro its. However, their commercial nature could be refuted in a particular case if it was established that they were not carried out with an intention of making pro its. Since non-pro it associations did not intend to make pro its, it was nearly impossible to establish the commercial nature of their activities.12
This judgment of the Court of Cassation has been criticized because it led to legal uncertainty and, according to some authors, to discrimination between (i) the private for-pro it sector on one side, and (ii) the private non-pro it sector as well as the public sector, on the other side.13 With this binary theory, the rules applicable to commercial actors were inaccessible to the private non-pro it sector (i.e. social economy initiatives adopting the non-pro it association form), even though they carried out the same activities.
2.2 Inadequate Legal Framework
This legal landscape proved to be somewhat ill-suited to the actors of the social economy sector who aspired to pursue a socially driven economic activity without the intention to make and distribute pro its. Indeed, legal uncertainty prevailed regarding the activities that nonpro it associations could engage in. Without being able to precisely determine the meaning of “ancillary”, social economy initiatives adopting the non-pro it association form and pursuing a commercial activity other than ancillary constantly faced the risk of judicial dissolution (article 18 of the Law of 27 June 1921), and their directors
the risk of being held liable. Furthermore, non-pro it associations typically had poorer access to bank loans.14
Moreover, insofar as the core purpose of a commercial company is to seek and share pro its, it could not be validly constituted for other purposes (including social purposes), and it could not validly act sel lessly (make donations, for example).15 Legal acts without an appropriate consideration could be declared void.
Consequently, neither the commercial company nor the non-pro it association form equipped the actors of the social economy sector with the adequate legal structure to smoothly implement such initiatives.16 However, such structures were needed by many actors of major importance, such as schools and universities, hospitals, charities selling various goods and services, and the like.
The cooperative company offered an interesting but limited alternative. The recognition of this company form in Belgium is linked to the increasing importance devoted to social issues in the second half of the nineteenth century.
The cooperative company was designed to be a collaborative framework between workers and/or customers and itself.17 It was based on the idea that it operates in the balanced interests of shareholders (who are sometimes also workers or customers) to satisfy their professional or private needs. At the time of their creation, the (public) limited liability company (société anonyme – naamloze vennootschap) was designed for capitalists engaging in substantial business activities, while the cooperative company served as its counterpart for the poor who pooled their efforts to survive. The modest investments supposedly involved justi ied a much lighter regulatory framework.
The cooperative company evolved over time and became a useful instrument for some social economy initiatives, but it did not encompass all its possible forms. It was designed to satisfy its shareholders’needs; it did not necessarily extend to the pursuit of a social mission and, above all, it remained a company with the mandatory goal of making pro its for the bene it of the shareholders. In practice, the cooperative company form was often diverted from its
original ideal because of the high degree of lexibility offered by its regime.18 The cooperative company will be further discussed in Sect. 6.
2.3 The Introduction of the Social Purpose Company in 1995
To provide a legal status to entities wishing to engage in commercial transactions without making pro its (or limited pro its only), the Law of 13 April 1995 ‘modi iant les lois sur les societes commerciales, coordonnees le 30 novembre 1935’ [amending the laws on commercial companies, coordinated on 30 November 1935] (MB 17 June 1995) introduced a new instrument to the Belgian legal landscape: the social purpose company (société à inalité sociale – vennootschap met een sociaal oogmerk).
The social purpose company was a legal status that could be adopted by any of the regular company forms governed by Belgian law. In other words, it was a social variant to the existing company forms.19 It was also thought of as a label signalling the particular purpose of the company.
Like any commercial company, a social purpose company could engage in commercial transactions. However, contrary to an ordinary company, the social purpose company did not intend to (signi icantly) enrich its shareholders: they could seek limited pro its or no pro it at all.20 Its articles of incorporation had to specify the following (article 164bis CLCC which became article 661 of the Companies’Code):
– The social purpose of the company must be precisely described in the articles of incorporation. They must explain how the activities of the company will realize this social purpose. The main goal of the company cannot be the enrichment of its shareholders.
– The shareholders seek no inancial advantage or a limited inancial advantage only.
– In case of a limited inancial advantage, the maximum rate of distribution of the pro its cannot exceed the interest rate established by a Royal Decree in execution of the Law of 20 July 1955. Since 1996, this interest rate has been ixed at 6%, meaning that a maximum of 6% of paid-up capital could be distributed as dividends every year (article 1, § 2, 5° of the Royal Decree of 8 January 1962
‘ ixant les conditions d’agrement des groupements nationaux de societes cooperatives et des societes cooperatives’ [laying down the conditions for the accreditation of national groupings of cooperative companies and of cooperative companies], MB 19 January 1962). This was coupled with a special tax regime whereby, up to a limited nominal amount, the dividend paid by a social purpose company was not subject to withholding tax.
– The social purpose pursued by the social purpose company can be social, cultural, humanitarian, religious, educational, environmental, and more.21
It can be achieved in different ways. Generally, the social purpose is achieved through the activities of the company. For instance, a social purpose company can employ former prisoners to foster their rehabilitation. Others prefer to allocate their pro its to the chosen social purpose, in particular by making donations.22
– The board of directors must draft a special report annually to describe (i) how the company ensures the achievement of its social purpose and (ii) how expenses are allocated to achieve this purpose.23 This is conceived as a means to prevent abuses.
– The terms according to which its employees can become shareholders 1 year after being recruited, and according to which they lose this quality 1 year after leaving the company. It is a speci icity of the social purpose company to be obliged to allow for its workers to participate in its capital.24
– The limitation of the voting power at the general meeting of the shareholders. Democracy being a fundamental feature of the social economy, voting at the general meeting may be implemented either by following the “one person, one vote” principle or by granting one vote per share with a limit of 10% of the voting power.25
– An asset-lock clause was mandatory. In the event of liquidation, after all liabilities have been cleared and the shares have been repaid, liquidation proceeds must “be allocated in a way that comes as close as possible to the company’s social purpose”. This means that they cannot be allocated to the shareholders, which is coherent with the “no or limited pro it” condition.
This set of conditions, especially the mandatory workers’participation, was often regarded as too constraining, in view of the meagre ( iscal, reputational, etc.) advantages linked to this special status. The social purpose company therefore proved to be less successful in practice than anticipated.26 Statistics are not easy to ind, but sources refer to approximately 1000 cooperative companies with a social purpose.27
The non-pro it association form was, in most cases, more appealing because it was mandatory to be eligible for various sorts of public support.28 Non-pro it associations also bene it from a favourable tax regime, in so far as they do not carry out any commercial activity other than an ancillary activity (see Sect. 4.5.1).
Later reforms have somewhat softened the traditional summa divisio between companies and associations, but not necessarily entirely in the interests of the actors of the social economy sector. This essentially implied the application of the rules of company law to the non-pro it associations, or at least to some of them. For instance, in 2014, rules governing the auditing of accounts were made applicable to the larger non-pro it associations. Non-pro it associations also became subject to the material jurisdiction of commercial courts (in lieu of the previously competent civil courts).29
3 Reforms of 2018–2019
Two new pieces of legislation have turned the existing legislative landscape upside down: the Law of 15 April 2018 ‘portant reforme du droit des entreprises’ [reforming the law of enterprises] (MB 27 April 2018) and the Law of 23 March 2019 ‘introduisant le Code des societes et des associations et portant des dispositions diverses’ [law introducing the Code of Companies and Associations and containing various provisions] (MB 4 April 2019).
3.1 Reform of Enterprise Law in 2018
Firstly, the Law of 15 April 2018 replaced the concept of “commerciality”, and thus of a commercial company, with the concept of “enterprise” (article 254, al. 1 of the Law of 15 April 2018). As a consequence, the Code of Commerce was replaced by the Code of
Economic Law (Code de droit economique – Wetboek van economisch recht).30
The de inition of the enterprise is a formal rather than a material one. In other words, entities fall under the de inition of an enterprise for what they are, rather than for the activities in which they are engaged. Subject to speci ic exceptions, the enterprise encompasses the following organizations: (i) natural persons with a self-employed activity, (ii) all legal persons and (iii) all other organizations without a legal personality, except if they do not intend to distribute pro its to their members or directors (article I.1, al. 1 of the Code of Economic Law).
The concept of enterprise is thus much broader than the concept of commercial actor. All non-pro it organisations are enterprises if they have a legal personality.
One of the main objectives behind this paradigm shift was to scrap the distinction between commercial operations and non-commercial operations, which became more and more dif icult to maintain, especially when faced with non-pro it associations that carried out economic activities as their main activities.31 It was necessary to reconcile the legal framework with this reality.32 The distinction between commercial and non-commercial companies therefore disappeared.
A consequence of the adoption of the new concept of enterprise is that the rules that previously applied to commercial actors now apply to all enterprises. This was nonetheless not as ground-breaking as it may seem since, as stated previously, many rules of the commercial economy already applied to non-pro it associations. Among the most important changes are:
– The extension to non-pro it associations of the freedom to undertake any economic activity,33 as established by articles II.3 and II.4 of the Code of Economic Law: “Everyone is free to carry out the economic activity of their choice”.
– The application of insolvency law to non-pro it associations. While previously only commercial actors could be declared bankrupt, now all enterprises can face bankruptcy (articles I.22, 8° and XX.99 of the Code of Economic Law).
–
The competence of the commercial courts (renamed enterprise courts) for all matters concerning non-pro it associations, which was already partially the case since 2014. The associative sector was generally not keen on the quali ication of non-pro it associations as enterprises.34 Within the ordinary understanding of the concept, an enterprise is characterised by an intention to seek and share pro its, thereby enriching its owners. It refers, at least symbolically, to the world of business and capitalism, of which many non-pro it associations do not want to be a part.
This conceptual revolution has nonetheless brought new perspectives to the social economy sector. Non-pro it associations provided actors of this sector with a more adequate instrument to combine a social mission with an economic activity. An outcome of this irst reform was to highlight that, contrary to an ancient belief, not all enterprises seek and share pro its.
3.2 Reform of Company and Association Law of 2019
Secondly, the Law of 23 March 2019 introduced the Code of Companies and Associations (Code des societes et des associations – Wetboek van vennootschappen en verenigingen) (hereinafter, the “CCA”).
The CCA was adopted to replace the former Code of Companies of 1999 (Code des societes – Wetboek van vennootschappen), which itself replaced the aforementioned Coordinated Laws on Commercial Companies.
The main objectives of this reform were a “simpli ication, lexibilization, modernisation and international mobility” of Belgian company law in order to make it competitive and attract more business within the territory.35
The new code gathers in one corpus the rules applicable to companies and those applicable to non-pro it associations (as well as foundations). It therefore also replaces the Law of 27 June 1921 governing non-pro it associations.
Albeit not all-encompassing, the convergence between both sets of rules was strengthened, especially in “Book 2” laying down rules applicable to all legal persons. Many mechanisms and solutions that
were previously speci ic to companies now apply to non-pro it associations as well. Without going into detail at this point, this includes rules concerning day-to-day management, directors’liability, con licts of interests, liquidation procedure, etc.36 This assimilation certainly makes the legal form of non-pro it association more suitable than before to the pursuit of a socially driven economic activity.
Above all, the new code introduces a new (but only partially different) distinguishing criterion between companies and non-pro it associations: the distribution or non-distribution of pro its. This means that the prohibition on conducting commercial activities (a concept that had been repealed in 2018 anyway) is no longer a distinguishing feature of the non-pro it association. The new de initions of the company and the non-pro it association based on this criterion is further discussed in Sects. 4 and 5.
4 The Non-Pro it Legal Persons as an Instrument of the Social Economy
4.1 Non-Pro it Association
4.1.1 New De inition of the Non-Pro it Association
As previously stated, the Law of 27 June 1921 forbade non-pro it associations from (i) pursuing any commercial activity other than that considered to be ancillary and necessary to its disinterested goal and from (ii) distributing pro its to its members or directors.
Article 1:2 CCA henceforth provides for a new de inition of the nonpro it association. It states that a non-pro it association is driven by a disinterested goal in the pursuit of one or more speci ic activities.
There is no longer any restriction to the nature of the activities that can be carried out by a non-pro it association. Read together with the previously mentioned articles II.3 and II.4 of the Code of Economic Law which proclaim the freedom to undertake any economic activity, this new de inition is understood as permitting non-pro it associations to carry out socially driven economic activities or any other economic activity. Consequently, non-pro it associations are henceforth in principle allowed to seek pro its in the pursuit of their economic
37
activity, even if the interplay with other types of rules (subsidies, tax rules) makes this less easy in practice.
However, the same provision states that a non-pro it association may not distribute or procure any direct or indirect inancial advantage to its founders, members, directors, or any other person, except in pursuit of its disinterested goal. Here lies the new distinguishing feature between companies and non-pro it associations: while companies must seek and share pro its, non-pro it associations can seek pro its but are prohibited from distributing them directly or indirectly, under penalty of nullity of the operation.
The preparatory work of the CCA reveals that prohibited distributions encompass any distribution or capital transfer from the non-pro it association, which are comparable to a dividend payment in a company.
38
Disguised distributions, that is, any transfer of assets or value outside of market conditions, are also prohibited. Indirect distributions are de ined by article 1:4 CCA as operations of the non-pro it association by which its assets decrease or its liabilities increase and for which it receives a compensation that it is patently too low or nonexistent.
This prohibition is mitigated by the explicit authorization to provide services for free or at advantageous prices when this falls within the scope of the disinterested goal of the non-pro it association. Those advantages must be delivered within the limits of a normal ful ilment of its speci ied activities (article 1:4, al. 2 CCA).
As was previously the case, Belgian law also recognizes the international non-pro it association as an alternative form of association. It is de ined as an association within the meaning of article 1:2 CCA which has a purpose of international utility (article 10:1 CCA). Its legal personality is granted by a royal decree.
The international non-pro it association is governed according to the same principles as its ‘domestic’counterpart, although the CCA grants a higher level of lexibility to the founders and members of an international non-pro it association in modelling its articles of incorporation and its operating rules. An international non-pro it association is recognised as an enterprise which can undertake the
economic activity of its choice, provided that is does not distribute its pro it to its members or directors, even indirectly.39
4.1.2 Convergence of the Rules Governing Non-Pro it Associations with those Applicable to Companies
When referring to non-pro it associations, the term “non-pro it” is increasingly replaced by “social pro it”, in an effort to express their “economic weight and their legitimacy as ‘enterprises’”.40
The CCA has introduced rules—drawn from company law—which make non-pro it associations better equipped to participate in the economy. The main objectives are to make them technically ef icient and to provide third parties such as creditors with an adequate protection.41
The following evolutions are signi icant:
– Harmonisation of the rules governing the liability of directors in companies and non-pro it associations. Under the former regime, directors of non-pro it associations were liable for any error or negligence (even the slightest) committed in the performance of their duties, regardless of whether this affected the non-pro it association itself or third parties.42
They are now subject to the same provision applicable to directors of companies, which clari ies that directors are only liable to the company or association for decisions, acts or conducts that patently exceed the margin within which prudent and diligent directors in the same circumstances can reasonably have a diverging opinion (article 2:56, al. 1 CCA). Vis-à-vis third parties and the non-pro it association itself, directors are liable for any damage resulting from a violation of the CCA or of the articles of incorporation of the entity (article 2:56, al. 3 CCA).
The amount of damages to be paid by the directors is capped to an amount ixed between 125,000 EUR and 12 million EUR, depending on the legal person’s annual turnover and the total of its balance sheet. The directors do not bene it from the cap in case of gross negligence or wilful misconduct, among other exceptions. This provides a more comfortable framework for directors of a non-pro it association to
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and a bang right in Carstairs' face. Promptly and coolly he switched out and went through the complicated operation necessary to isolate that section.
Thompson watched him in some surprise. "You've got used to fuses, then," he said.
Carstairs flushed. "Er—" he hesitated a moment. Thompson waited in expectant silence, which is the severest cross-examination to a very young man. "I got a shock some time ago and it upset my nerves a bit. I'm alright now."
"It does upset you if you get it badly. What did you get, four hundred?"
"Two thousand."
"Good Lord. That's usually fatal. How did you manage it?"
Carstairs was silent for a moment; he looked at Smith who was down below in the engine room, then he turned and faced Thompson.
"It was my own fault. I was fooling about, trying some experiments, you know—and tired. It knocked me over. Smith and Darwen brought me round; Smith was jolly decent. You needn't say anything to him about it if you don't mind, it was his request." He looked Thompson steadily in the eyes like a practised liar.
Thompson smiled with a sort of admiration and pleasure. "You'll be more careful next time," he said.
"I shall, very careful," Carstairs answered, and Thompson smiled; he started to go away, but turned at the head of the steps.
"I shouldn't be in a hurry to leave this job if I were you. If a vacancy occurs, I think I can promise you a Shift Engineer job here." He went down the steps.
Carstairs felt a glow of exultation. "Thanks very much," he said.
It has been observed that misfortunes never come singly, it is equally true that good fortune comes in lumps also. The observant man like the successful gambler may gain much profit by regulating his actions to the ebb and flow of fortune. What appears to the casual or timid observer to be a particularly "long shot" is often the outcome of close observation, and not the mere freak of a desperate plunger. The tide of affairs never sets either way without warning. The watchful man, like the careful mariner, knows fairly well what to expect. Carstairs was a particularly close observer, and after Thompson's remarks and other things, he had an idea that the luck was flowing his way again; he was not much surprised therefore to find a letter waiting for him next morning from Darwen telling him of a vacancy at Southville, and urging him to run down and see the chief. "I have so strongly recommended you that I think the job is yours," he said.
Carstairs felt a singular satisfaction that he had gauged the trend of his luck so accurately. He went down to the works to see Thompson and get a day off. Thompson looked rather disappointed. "You'll get that alright," he said, "but I'm rather sorry. I've had an inquiry about Smith here (he held up a letter), there'll probably be a vacancy soon. I suppose you don't think it worth while waiting?"
Carstairs stood for a few minutes in deep thought. "I think it would be rather stemming the tide of my luck, wouldn't it?" he remarked, quite seriously.
Thompson smiled. "Alright. I'll write to the chief at Southville telling him I have had reason to considerably improve my opinion of you."
A slightly increased colour mantled on Carstairs' cheek. "Thanks! if you will," he said. Next day he went to Southville. He saw the chief and was appointed there and then. He spent the rest of the day with Darwen who showed a somewhat un-English effusion in his greeting. They strolled round the pleasant southern town together.
"This is civilization," Darwen said.
"That's so," Carstairs agreed.
In a week he left the grimy, little midland town, but before he went, there was a solemn gathering of the shift engineers and switchboard attendants in the drawing office for the purpose of presenting him with a standard work on electricity (Darwen had had a silver cigarette case). Smith made the presentation. In a somewhat nervous little speech, he expressed regret at Carstairs' departure, and rosy hopes of his future, with a few glowing tributes to his personal qualities. Carstairs thanked them very solemnly, and deflected the glowing tributes on to the assembled company. These little gatherings were a recognized institution in Central Stations; about every three or four months there would be a "whip round" of half a crown or so each to present some man who had been there about six months with a small token of esteem on the occasion of his departure to a better job. Some men have quite a collection of pipes, cigarette cases, walking sticks, slide rules, books, etc.
Just before he left the works for the last time, Foulkes, the stoker, accosted him.
"There was some gipsy-looking bloke asking if a man called Carstairs worked here, yesterday," he said.
"Did he say he wanted to see me?"
"No, sir, just asked if you worked here."
"What did you tell him?"
"I said you'd just got another job at Southville."
Carstairs was very serious. "What was he like?" he asked.
"Not quite as tall as you, sir. A rough-looking cove. Walked with a bit of a limp, like as though he'd bin shot or something sometime."
"A young man?"
"'Bout the same age as yourself."
"Ah. Poor devil! Limp, eh?"
"Not much, sir."
"Still quite enough, I expect. Poor devil! Well, thanks very much, Foulkes, good-bye." Carstairs held out his hand. "May bump up against you again some day. Good-bye!"
He turned and walked out across the yard, and the burly stoker looked after him with interest and curiosity. "They comes and goes," he soliloquized. "Rum thing about that gipsy bloke, still it ain't no business o' mine." Which was a point of view he had acquired in the army.
Darwen met Carstairs on the platform at Southville station.
"You're on with me for the first week," he said. His marvellous eyes sparkled with delight. "Where's your luggage? I've got a cab waiting. The new digs (I swopped this morning) are about two miles out, first-class place; thirty bob a week each. You don't mind that, do you? Piano too. Do you vamp? Never mind, I can do enough for two."
He seemed unusually excited. Carstairs couldn't help feeling flattered at the obvious pleasure his arrival caused.
As they rattled away in the cab, Darwen explained: "I'm jolly glad you've come, sort of levels up over that misunderstanding about this job."
"Oh! that's all right."
"Yes, it is now. You're a damn good sort, you know, Carstairs. You and I ought to run this job. Chief and chief assistant. How would that suit you?"
Carstairs smiled, a steady smile. "First-class," he answered.
Darwen was watching him closely, he seemed quite exultant at Carstairs' reply. "I knew it would. You wait till you see the chief and chief assistant here, they're not fit to run a mud dredger."
"Why don't you sack 'em then?" Carstairs laughed.
Darwen's eyes glittered strangely. "By Jove, that's it, they can't stick it much longer. Don't you see. Damme! I wouldn't give either of 'em a shift engineer's job."
"He seemed alright when I interviewed him."
Darwen snapped his fingers impatiently. "Bah! He's civil and all that, but he'll never be an engineer."
They pulled up at the diggings, a nice-looking semi-detached villa, with big, bay windows, and a well-kept front garden.
"This is alright," Carstairs commented, "if the grub's any good."
"Leave that to me, old chap. There's a daughter in the house, not bad looking."
"Go steady, Darwen."
"I'm as safe as houses, old chap! She's engaged to a grocer's assistant in the town here, and describes herself as 'a young lady'; 'me and two other young ladies,' you know the sort."
"H'm—ye-es."
They got the luggage stowed away and sat down in the sitting-room, a large room on the second floor with a big, bay window looking out on the quiet tree-shaded road. Some of Darwen's technical books and papers were scattered on the table; there were two big easy chairs and a comfortablelooking couch with numerous cushions scattered about; the carpet was light-coloured and thick. The general tone of the room was light, a sort of drawing-room effect. Probably to the expert feminine eye the curtains and other things were old and cheap, and dirty, and everything dusty. To Carstairs, straight from the dingy north, it appeared a palace. He threw himself into an easy chair and putting his legs up on another, sighed with content.
"This is jolly good, after that grimy hole!"
Darwen looked at him with sympathy. "That's so," he agreed. He sat down at the piano. "This isn't a bad instrument," he observed, "it is stipulated that the daughter may be allowed to play on it when she likes."
"Oh; the devil!"
"Not at all." He sounded one or two notes thoughtfully, then he glided off into something slow and soothing with a tinge of melancholy in it too. He stopped and looked at Carstairs critically. "That's how you feel," he said.
"Precisely," Carstairs answered. "What is it?"
"Chopin's Nocturne."
"Never heard of it."
"No? It's not supposed to appeal to the vulgar mind," Darwen laughed.
"Well, do it again. I like it."
Darwen swung round on the stool and "did it again," and went on and on, seeming to lose himself; his long, artistic fingers moved with a graceful, loving poise across the white keys. He stopped abruptly and wheeled round. "How's that?" he asked.
"First-class," Carstairs answered.
"What did you think of while I was playing?"
"What I want to do. As a matter of fact I elucidated a knotty point in connection with an idea I'm working out."
Darwen's dark eyes lighted up into a positive gleam. "It's curious," he said. "I bet when old Chopin composed that thing he had no ideas of electrical machinery in his head. What's the line of the invention?" He swung round and toyed with the keys; a low, sweet strain welled out, pleading, winning.
"Well, it occurred to me one day that there was no adequate reason why —" Carstairs stopped, seemingly interrupted by his own thoughts. "No," he said, as if speaking to himself. "It's not quite right after all." He laughed aloud suddenly. "The reasons," he said in his normal voice, "appear more and more adequate as I investigate the case, still——"
Darwen waited in expectation for some time, but Carstairs remained silent, lost in thought. Suddenly Darwen burst into life and rolled out an immense volume of sound from the piano.
A look of pain crossed Carstairs' features. "What the devil do you make that row for?"
"That row, as you call it, is from Wagner's 'Lohengrin.'"
"Is that so? Well, it's a jolly good imitation of a breakdown in the engine room."
Darwen laughed. "You have a vulgar mind, old chap." He branched off into an Hungarian waltz.
"That's better."
"Suited to your taste, you mean." He wandered on through numerous scraps of dance music. "Do you dance, Carstairs?"
"Not much."
"Oh, you must. You and I are going strong this winter."
"I'm going to work."
"Quite so, so am I. So much that the average man considers work is painful, misdirected effort. Do you want results, financial results?"
"You can bet your boots on that."
Darwen's fingers moved very slowly, it was a slow waltz tune, very slow; his gaze was far away. "The whole world is a shop," he said, speaking
very slowly. "Everything is bought and sold; the most successful salesman is not the man who has the best goods, but he who shows them most advantageously. We sell our brains, you and I, our brains and nerves. The buyers are the Corporation; this collection of greengrocers, drapers, lawyers, doctors, and one navvy. They are entirely incapable of judging our technical abilities, they rely on the opinion of a fool; a sort of promoted wireman, the chief." The music ceased altogether, and he wheeled round facing Carstairs. "And however much you grind, and swot, and work, this fool (who only got his job because these people are unable to distinguish between a man who can use his hands and one who can use his head) will always fix your market value, and by his own little standard. The obvious conclusion is to get a better place in the shop window than the fool occupies."
Carstairs was silent.
"Do you agree with that?"
"Conditionally; depends on the method adopted."
Darwen blazed out into a sudden anger. "You're a fool, Carstairs. You and your methods. It doesn't matter a curse to you how you generate your electricity, does it? You want results, that's all! The correct methods are the most successful, the most economical." He sobered down again suddenly and smiled. "Look here, Carstairs, I want to make this job, yours and mine, worth more than it is. I like this town and I want to stay here, but I must get some bally pay."
"Hear, hear!"
"Well, I'm going to work the oracle. I'm going to know every man on the council, then I'm going to apply for a rise."
"I'm with you entirely."
"These things are easily worked. A man who's not handling his own money is very generous to his friends. Can you lie?"
"I'm an expert."
"Well, we shall want to lie sometimes. The age of truth has not yet arrived, and the man who sticks to the truth is before his time, consequently he's not appreciated, which means, he's not paid. I want pay. How's that?"
"Very good."
"I think so too. The mistake most people make is not knowing when to lie. To be a good liar requires more brains and just as much pluck as to tell the truth."
A slow smile flickered round Carstairs' face. "You introduce me to the proper people, and I'll tell 'em unblushingly that we're two jolly smart engineers very much underpaid."
"That's the idea! And they'll believe you, such is the paradox of this lying and trustful generation."
These young men, it will be seen, were very young, but their wisdom was much in excess of the pig-headed obstinacy of the average greybeard.
CHAPTER VIII
The works at Southville were rather larger than the works he had just left in the Midlands, and Carstairs felt a delightful sense of exaltation as he first took charge of a shift by himself. For eight hours he was entirely responsible for the efficient, economical, and safe working of about 6000 horsepower of plant. He felt a sense of responsibility, of age; he felt uplifted and steadied. He was very thoughtful, but very confident; he had taken great pains during the week he was on with Darwen to make himself thoroughly acquainted with everything about the station. His confidence was the direct outcome of his knowledge; he looked at the various engines,
dynamos, boilers and switch gears, and felt that he fully grasped the why and wherefore of it all; he reviewed the possibilities of what might happen, what might break down, in the various component parts of the complicated whole, and what he would do to tackle it. He considered it all very solemnly and felt very confident; he knew he would not scare. Physically he was in the pink of condition, his head was very clear and his technical knowledge very bright from constant use.
The chief, an awkward-looking, flabby man, came down to see him on his first shift. "Well! do you think you can manage it?" he asked.
"Yes," Carstairs answered, looking his chief steadily in the eyes; the eyes were lack-lustre and heavy, they shifted uneasily and roamed round the engine room: he stepped up to a bit of bright brass work and rubbed his finger across it. "That won't do," he said, holding up a finger soiled with greasy dirt. "Make that man clean that." He turned and went away abruptly.
Carstairs called the engine driver, a little man of herculean build. "I knowed he'd spot that," the man said, in a tone of protest. "Got a eye like a hawk, he have."
It was the first time Carstairs had noticed this man particularly; they had been on different shifts before. He looked him over with approval; the arms, bare to the elbow, were astonishingly big and sinewy-looking; the chest was immensely deep, it arched fully outward from the base of the full, white throat; the top button of his shirt, left undone, showed a glimpse of a very white skin and the commencement of a tattoed picture ("Ajax defying his mother-in-law," the man called it); his eyes were a bright hazel brown, singularly piercing and steady.
"What's your name?"
"Bounce, sir." He stood up very straight, his piercing eyes resting with steady persistence on Carstairs' face.
The name seemed remarkably appropriate. The whole man was suggestive of indiarubber.
"Been a sailor or soldier, haven't you?"
"Sailor, sir. I done twelve year in the navy."
"Did you?" Carstairs looked at him, thoughtfully. "I've got an uncle in the navy."
"What name did you say, sir?"
"Carstairs."
"Carstairs, I knows him. Commander Carstairs. I was with him in the 'Mediterranean.' Nice bloke he was. You ask him if he remembers Bounce, sir, Algernon Edward Bounce, A.B., light-weight champion boxer of the Mediterranean Fleet. He was there when I won it at Malta."
The man's manner was exceedingly civil and respectful, but there was something about it that kept irresistibly before your mind all the time that he was an independent unit, a man. After twelve years of the sternest discipline in the world this man was as free as the air he breathed, there was no sign of servility. The thought passed through Carstairs' mind, as he looked at him, that this breed, truly, never could be slaves.
"I'll ask him when I see him. So you're a boxer, are you?"
"Yes, sir. Light weight, though I ought to go middle; eleven stone two pounds, that's my weight. I can get down to ten, but I ain't comfortable, though I 'ave a done it."
Carstairs measured him with his eyes. He seemed very little over five feet. Later on, he ascertained that he was exactly five feet three inches.
"I see. Just wipe over that brass work, will you?"
With remarkable alacrity, and a peculiarly prompt and decisive manner, the man saluted and set about his work.
Carstairs watched him in silence for some minutes, struck more than ever by the appropriateness of his name; he marvelled too at the singularity
of his chief. In all that clean and bright engine room there was only that one bit of obscure brass work uncleaned, and the chief had spotted it. "An acutely observant man, evidently," Carstairs meditated.
Later on in the evening, the chief assistant dropped in. He was a big, heavily-built man with a well-shaped, massive head and handsome, even features with general indication of great strength—mental, moral, and physical; the sort of man many women go into ecstasies over: the element of the brute seemed fairly strong in him. To Carstairs' critical eyes and slow, careful scrutiny, he appeared, however, somewhat flabby. He stood behind Carstairs on the switchboard and watched him parallel machines.
Now the process known as "paralleling" or "synchronizing" alternating current dynamos or "alternators" is somewhat critical; the operator has to watch two voltmeters and get their reading exactly alike; he also has to watch two lamps (now usually supplanted by a small voltmeter) which grow dull and bright more or less quickly, from perhaps sixty times a minute to ten or twelve times per minute, as the engine drivers slowly vary the speed of the engines. When the voltmeters are reading alike, and during the small fraction of a minute when the lamps are at their brightest, the operator has to close a fairly ponderous switch; if he is too late or too early, but particularly if he is too late, there are unpleasant consequences: the machines groan and shriek with an awe-inspiring sound, keeping it up very often for a considerable time; all the lamps on the system surge badly, and the needle of every instrument on the switchboard does a little war dance on its own, till the machines settle down. Sometimes the consequences of a "bad shot" are even more dire. There once appeared in one of the technical journals a pathetic little poem about a pupil's "first shot," how "he gazed severely at the voltmeters," and "looked sternly at the lamps," then he "took a howler," and "switched out again," "wished he hadn't," "Plugged in again and—bolted." In a similar journal there was another sort of prose poem, too, written in mediæval English which finished up a long tale of woe thus: "He taketh a flying shot and shutteth down ye station."
This was the operation then (in which every man needs all his wits and some more than they possess) in which Carstairs was engaged at a critical period of the load (for be it remembered the time available is always strictly
limited) when the chief assistant stood behind him. He remained calm and impassive, as behoved his countenance, for some time, then, just when the phases were beginning to get longer, and Carstairs took hold of the switch handle in readiness to plug in; the chief assistant stepped excitedly up behind him. "Now! Be careful! Watch your volts! There! There! You might have had that one! Look out, here she comes! Watch your volts, man, watch your volts!"
Carstairs felt like knocking him down, he missed two good phases that he might have taken, then he "plugged in" rather early. The machines groaned a little, but soon settled down.
"Too soon! Too soon!" the chief assistant said,
In angry silence Carstairs turned and signalled the engine driver to speed up the machine. The chief assistant left the board, and went out without further comment.
"Does that ass always play the mountebank behind a chap when he's paralleling?" Carstairs asked his junior.
"Sometimes, he gets fits now and again: Fitsgerald, the chap that's just left, turned round and cursed him one day. I nearly fell off the board with laughing. Old Robinson looked at me. 'What the devil are you laughing at?' he said. I might have got your job if it hadn't been for that. Fitsgerald got the sack over it."
"Apparently I shouldn't have missed much," Carstairs said as he went away.
When he got home at about half-past twelve, Darwen was sitting up for him. "How did you get on?" he asked, with his genial smile.
"Oh, first-class." They sat down to supper. "Took rather a howler, paralleling six and seven. That ass Robinson was jigging about like a monkey-on-stick behind me, telling me what to do. Next time I shall stand aside and ask if he'd prefer to do it himself."
"Don't do that, old chap, he's a malice-bearing beast. Funks always are! Don't take any notice of him. Forget him, or send him away; ask if he'd mind watching the drivers, as they brought her down too quick, or something, last time."
Carstairs was silent.
"Fitsgerald got the sack for cursing him over the same thing. He was a red-headed chap. We were talking about Robinson's unpleasant ways (he'd had a go at me the day before). I said he wanted a good cursing to cure him of it, and I'm blowed if Fitz didn't curse him about a couple of days later." Darwen's eyes seemed to flicker with an uncanny sort of light, his voice dropped into a reflective tone. "Threatened to chuck him over the handrail if he didn't go off the switchboard. Hasty chaps those red-headed fellows are. We had a chap at school—what school were you at, Carstairs?"
"Cheltenham."
"Were you? I was at Clifton, went to Faraday House, after."
Pushing back his chair, Darwen, got up and went to the piano, he played some very slow, soft music, slow and soothing, it breathed the breath of peace into Carstairs' troubled soul.
"Robinson is only a fool," Darwen said over his shoulder. "I feel rather sorry for him—hasn't got the heart of a mouse—gets in a frightful stew when he's got to parallel himself—he's not a bad-hearted chap—done me one or two rather good turns."
"I thought he was alright too, at other times." Carstairs felt the spirit of peace stirring within him.
"It's kinder to him to let him drift, he doesn't mean anything—can't help himself—nervous, you know. I just smile at him."
"Suppose that is the best way. I'll have a shot next time, anyway. Made me rather ratty to-night."
Darwen played for some time in silence. "Chief come in at all?" he asked, at length.
"Yes. Came in and groused about a bit of brass work being dirty."
"That's like the chief. He'll never express an opinion on anything except its external appearance; very safe man, the chief, extremely safe, but stupid: he'll fail, not through what he does, but what he leaves undone." He ceased speaking, but the music went on slowly welling out, breathing good will and trust to all mankind. It died slowly away leaving the tired listener in a blissful state of rest. Darwen got up and looked at him with sparkling, observant eyes.
"Good-night, old chap. I'm going to bed."
Carstairs arose slowly from the big, easy chair, "Wish I could play like you, Darwen."
The rest of the week passed (at the works) with singular uneventfulness, in fact never afterwards did Carstairs have such an uneventful week on load shift; but all the same the memory of his first week on shift by himself remained always clear and distinct above all other experiences; never afterwards did he feel the delightful thrill of responsibility, of excitement, of awe almost, as he walked round the engine room and boiler house surveying the men and plant, for those first few days, and felt that for eight hours he was monarch of all he surveyed; with all the other men far out of call, spreading out in different parts of the town, reading their papers, at the theatre or music halls, while he was responsible for the lightening of their darkness, and the safe keeping of the men and plant around him. In after life he often reflected that the princely salary of £104 per annum was singularly inadequate for the kingly nature of his office; but the greengrocers, the doctors, and publicans thought it was remarkably good for a man who spent most of his time walking about with his hands in his pockets. These works had been making a financial loss of from £100 to £2000 every year since they started, with the exception of one year, when, by careful manipulation of the accounts, they managed to show a profit of £20, which, under the expert examination of a proper accountant, would probably have been converted to a loss of £500.
Darwen watched the finances with a keen interest. He was very chummy with Robinson; they studied the reports of the various stations together with great earnestness. "A loss or a profit doesn't matter much to a corporation as long as they have continuity of supply." Darwen laid it down as a law, and Robinson heartily agreed. That axiom was only a half truth, but the foundation of all municipal work is only a half truth, so it did not matter much.
Robinson was very proud. "We never have the lights out here," he said. And Darwen smiled approval. "That's so," he agreed, and on his shift he took care that it always should be so; he had every engine in the place warmed up, ready for instant use, and two boilers always lighted up and under pressure in case of necessity. Robinson approved of his method, and the chief—the chief grumbled about the boiler house being dirty, but on Darwen's shift it was cleaner and more tidy than on any other shift; also the engine room was brighter and more spotless, so much and so persistently so, in fact, that the cautious chief was drawn out of his shell to express a decided opinion to the chairman of the electricity committee (who remarked on it). "Yes," the chief said, with a little flicker of enthusiasm, "that man Darwen is decidedly the best engineer I've ever had." Which remark was not overlooked by the chairman, a doctor, a large man with a large imposing black beard, who had been struck, as who could fail to be, by the remarkable beauty of face and form and general impression of intelligence of the athletic young engineer.
It was not very long after Darwen had observed the chief and chairman in conversation and looking pointedly at him, that he developed certain symptoms which, in his opinion, necessitated medical advice. Common sense, he explained to Carstairs, pointed out the chairman as the man to go to.
The doctor recognized him at once. "Hullo!" he said, looking him over with distinct approval, for Darwen's winning, frank smile captivated him at once. "Has the electricity got on your system?" The doctor was a jovial, hearty man.
Darwen laughed. He showed precisely the right amount of amusement at the joke, then, shortly and precisely, he stated (almost verbatim from a
medical book he had looked up in the reference library) the symptoms of a more or less minor complaint.
Recognizing it at once, "I'll soon put that right for you," the doctor said, in his hearty, jovial way. His extensive practice was largely due to his jovial manner; he appreciated the clear and precise statement of the symptoms.
"It's nothing serious then, doctor?"
"Oh, no!—no! It might have been, of course, if you'd let it go on."
"Ah! that's just it; it's the same with an engine, you know, 'a stitch in time.' I like to get expert advice at the start."
This was business from the doctor's point of view. He became serious. "Most true," he said. "Still, people will aggravate their complaints by socalled home treatments."
"The penny-wise policy, doctor, the results of combined ignorance and meanness."
"I wonder," Darwen said, later on, as he poured the contents of a medicine bottle down the bathroom waste pipe, "I wonder what in thunder this is, a sort of elixir of life served out to most people for most complaints at a varying price. Funny what stuff people will pour down their necks."
Some hours later, as they sat facing each other in their big easy chairs, Darwen said: "Didn't you say your guv'nor was a parson, Carstairs?"
"Yes. Why?"
"Because the time has arrived to trot him out."
"What do you mean?" Carstairs flushed rather angrily.
"I have not got a guv'nor," Darwen observed, sadly; "haven't any recollection of my guv'nor. He went down with the Peninsula coming home from Australia. He was a mining engineer."
Carstairs was softened. "Hard lines," he said, and there was much sympathy in his tone.
"It is," Darwen agreed. "A guv'nor helps one so much. I want you to get your guv'nor to come down and stay with us for a few days. What College was he at?"
"Christ Church, Oxford."
"Then it's almost a cert he'll bump up against some one he knows down here, some other parson, or somebody. I want to get into the chairman's crowd, he's churchwarden at St James'. I'm going there."
Carstairs removed his pipe slowly from his lips and stared more or less blankly. It was the limit of surprise he allowed himself ever to express.
"Yes, and I'm joining St James' Gym. and the Conservative Club. Robinson has introduced me to one or two rather decent people, too; Robinson belongs here, you know. To-morrow you and I are going to sign on for a dancing class; Robinson's people put me on to it; Robinson doesn't dance. I'm pretty good, and you'll be good with practice. Every fit man can dance well with practice."
Carstairs puffed silently at his pipe for some minutes. "Will the dividends on dancing, gymnastics, church-going, etc., pan out better than working?" he asked at length.
"Do you think you are getting the full value of your present stock of knowledge?"
"Not by chalks, but one never does."
"I beg to differ; some men get paid considerably over the value of their knowledge."
"Perhaps you're correct," Carstairs admitted, after a pause.
"Well, I want to join the happy band. Shove your knowledge forward, having due regard to the manner of your doing so, that it does not defeat its
own ends. And that is wisdom; you're paid for the combined product of your knowledge and your wisdom. Wisdom is the most scarce, the most valuable, and the most difficult to acquire: it is the knowledge of the use of knowledge. Do you see?"
"They bear the relation to each other of theory and practice in engineering."
"Not quite. Theory is an effort of the imagination, either a spontaneous effort of your own, based on known facts, or an assimilation of the results of other men's practice as recorded by them in books. The sources of error are twofold; the limits of your own imagination, your own conception of the other man's description, and the limit of the other man's gift of expression and explanation. Practice is your own conception and remembrance of what you yourself have personally experienced. Both are knowledge; wisdom is distinct from either."
Carstairs smiled. "Well, it's your wisdom I doubt, not your knowledge. I mean to say, that my application of my knowledge to my conception of your application of your knowledge, as expressed by you in the present discussion, leads me to doubt the accuracy of your application of your knowledge to the case under discussion. The possible sources of error being in my imagination or your expression, and as my imagination is a fixed quantity, unless you can improve your expression, I shall fail to coincide with you. How's that?"
"That's very good." Darwen took a deep breath and laughed. "Let me have another shot. Who gets the most money, the successful professor or the successful business man?"
"The successful business man."
"Hear, hear! That's because he's selling wisdom, while the professor is selling knowledge."
"I disagree, on two points. Number one, the business man sells necessities, boots for instance; the professor sells luxuries, quaternions, for
instance." Carstairs paused and quoted, "'What I like about quaternions, sir, is that they can't be put to any base utilitarian purpose.'"
"Quaternions, my dear chap——"
"Half a minute! Number two, the business man sells knowledge of men and affairs as opposed to the professor's knowledge of things only."
"The Lord has delivered you into my hands, Carstairs."
"I saw it as soon as I'd spoken."
"Well, let us acquire knowledge of men and affairs, instead of merely of things—engines."
"I admit that my conception of——"
"Chuck it."
"Well, you've made a good point."
"You're Harveyized steel, Carstairs, and it gives me immense satisfaction to see that I'm making some impression on you. Well, you may go on grinding away all your life, and if nobody knows of the knowledge you possess, you'll never get paid for it."
"But I will show it by the application of it in my work. The chief is bound to see it."
"Not a ha'porth, my boy. And if he does, the chances are that he'll depreciate it in the eyes of the world, or get you the sack, because he'll be afraid of you."
"I admit the probability of those possibilities."
"As an engineer you must never forget the interdependence of parts: as a successful man you must never overlook the interdependence of everything in nature. Smile at men as if you were overjoyed to see them and they'll give you anything, as long as it's not their own property."
