What dealings does Napolean have with Frederick and Pilkington and how do they affect the animals?
Because there were certain items that the animals could not produce on their own--such as horseshoes, nails and dog biscuits--Napoleon decided that he would begin trading with the humans. The animals seemed to remember that one of the commandments forbid them from such an agreement, but Napoleon assured them that there would be no need for personal contact with anyone who stood on two legs. First, hay, corn and eggs were sold through the animals' liaison, Mr. Whymper. But the large pile of timber on Animal Farm aroused the interest of both Pilkington and Frederick.
The animals distrusted Pilkington... but greatly preferred him to Frederick, whom they both feared and hated. (Chapter 8)
But Napoleon finally decided to sell the timber to Frederick.
The pigs were in ecstasies over Napoleon's cunning. By seeming to be friendly to Pilkington he had forced Frederick to raise his price by twelve pounds. (Chapter 8)
But the money which Frederick used for payment turned out to be forgeries, and Napoleon "pronounced the death sentence upon Frederick." But Frederick was not finished. He and his men returned, and they dynamited and destroyed the windmill. The animals eventually ran the humans off in what would be known as the Battle of the Windmill, but its destruction guaranteed that the animals would endure a hard life that winter,
... as cold as the last one had been, and food was even shorter. Once again all the rations were reduced... (Chapter 8)