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This is the beginning of the novel and the beginning of the story of Emil Sinclair, the narrator and protagonist of the novel. He studies in a Latin school. He is a young boy, around ten years old.
We are introduced to a happy family living in a peaceful and well managed home. The family comprises of Emil Sinclair, his sisters and parents. They have a maid-servant named Lina who is an integral part of the household.
As the title of the chapter "Two Realms" indicates, we are told about two realms or two different worlds. One is the world of Sinclair's parents comprising of their efficiently managed home. This is a world of cleanliness, orderliness, discipline, duty, confession, forgiveness, love, reverence, wisdom and everything that is good and acceptable in a civilized society. It is a world in which Christmas is celebrated and hymns are sung. In short, it is a world of happiness and security, which Sinclair refers to as the realm of light. There is another realm comprising of elements, which are not desirable or acceptable by civilized and cultured people. This is the realm to which the house next door belongs. Unwanted noises and information of undesirable happenings trickle into Sinclair's home. Thus the two worlds often overlap, the only exception being Sinclair's parents bedroom. The other world is the "dark" world. It is the world of evil and crime, in which there is fear and insecurity.
Sinclair is tormented by his conscience too. He feels guilty as he has told lies and sworn by God that it is the truth. He thus feels that he has no right to pray for help. His honest and beautiful world has collapsed because of his feelings of guilt. He has been dishonest and can find no way to get out of the situation. He does not have the courage to confess his wrong action to his parents. He thus continues to suffer silently. Had he confided in them, they would definitely have been able to ease his trouble. Sometimes children are unable to realize the simplicity with which problems can be solved. In fact, even adults do not realize how simple, solutions sometimes are.
One night Sinclair's mother brings him a chocolate. The sight of anything good also does not make him happy, as he feels that he does not deserve it. He feels that he now belongs to the world of evil, the world of darkness. He is reminded of former years when he received rewards and pleasant things. Those rewards had made him happy because he felt he really deserved them.
Kromer is an example of the evil aspect of mankind. He belongs to the darker realm of existence. Because of him, Sinclair goes through severe crisis particularly mental crisis. Such a theme is not unusual in the novels of Hermann Hesse. In Demian too, this theme occurs in various parts of the novel, though the crisis faced by Sinclair varies from time to time. Herman Hesse lived in an atmosphere of crisis ever since his early childhood. At the age of six, he was sent to a boarding school in Basal. He must have felt very sad to leave his parents at such a young age.
The Hesse's being missionaries, had to reconcile and live in harmony with people of different faiths, and yet maintain their identity and conviction. This was like adjusting to two different worlds. Hermann Hesse might have got the idea of two realms from his own surroundings, though the two realms, which he describes in this chapter, are polar opposites to each other.
Sinclair's yearning to belong to the realm of his parents is a reminder of the author's yearning to be with his parents and to please them. Hermann Hesse was an unmanageable child and was therefore sent to a boarding school at the age of six. In this chapter, though Sinclair yearns to belong to the respectable and socially acceptable world of "light" inhabited by his parents and sisters, he falls a prey to the world of "darkness", when he indulges in telling lies. This is a sinister world but is always subconsciously more attractive.