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The sale of the stack of lumber happens "off stage." That is to say, the animals are called together for a special gathering, and Napoleon simply announces that he's sold it to Frederick. (This can be found in Chapter VIII.) He outwits himself by making such a big deal about how much he was paid for the lumber, showing the money to the animals—and then finding out that he was swindled. The bank notes were forged, and so he (and the rest of the animals) got nothing for the wood. He therefore outwits himself twice: once by getting robbed, and once by bragging about it and looking like a fool.
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