What historical event could the sale of the timber represent?

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While it can be difficult to provide one-to-one correspondences between all the events in Animal Farm and real historical events, Napoleon's sale of the timber to Frederick could represent the 1939 Soviet-German Pact.

In many ways, Napoleon's interactions with Frederick mimic Stalin's with Hitler. Like Stalin with Hitler, Napoleon bitterly denounces Frederick as the worst of enemies, only to enter into a secret agreement with him that is supposed to be mutually beneficial. Like Stalin with Hitler, Napoleon is betrayed by Frederick and played for a fool. Like Hitler, Frederick, after seeming to seek friendship with Napoleon and the farm, turns on them and attacks, blowing up the windmill. Hitler likewise turned on the Soviets in 1941 with a huge military campaign meant to subjugate the country.

The circumstances are not an exact parallel, but they mirror making a secret agreement with a treacherous and deceitful enemy and ending up betrayed and attacked.

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Much like Stalin, Napoleon erred in making the decision to do business with Mr. Frederick. The stack of five-pound notes Napoleon received turned out to be counterfeits, even though the pigs laud Napoleon's genius in brokering the deal. And, like Hitler, Frederick and a group of men attacked the farm shortly after the agreement, dynamiting the windmill before being driven off by the enraged animals.

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This represented Stalin's choice to go with Hitler in the years before World War II.  Stalin, of course, is represented by Napoleon.  In real life, Stalin eventually made a pact with Hitler in which he and Hitler agreed to refrain from attacking one another.  This was, eventually, broken by Hitler when he invaded the Soviet Union.

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