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Napoleon contemplates selling the lumber to Frederick and Pilkington. He initially attempts to sell the lumber to Frederick who seems more interested, but Frederick refuses to pay a reasonable price. When Napoleon doesn't like Frederick's offer, he spreads rumors that Frederick is in collusion with Snowball. Napoleon then enters negotiations with Pilkington and tells the animals that he will sell the lumber to him. Napoleon brags about the fact that he never even considered selling the lumber to Frederick and claims that it was below his dignity. However, two days later, Napoleon announces to the animals that he has agreed to sell the lumber to Frederick. Napoleon claims that he had been in secret agreement with Frederick the entire time. Napoleon then brags about the fact that by claiming to be in agreement with Pilkington he had doubled the price of the lumber. However, Frederick pays for the lumber with forged banknotes and Napoleon essentially gives the lumber away for free. Napoleon outwits himself by asking Frederick for banknotes instead of accepting a check. He also outwits himself by bragging about his negotiation tactics to the animals and ends up making a terrible business decision.
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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