Napoleon decides to sell the Animal Farm timber to Mr. Frederick after initially seeming to favor the rival, Mr. Pilkington. Napoleon had previously demonstrated an unfriendly attitude toward Frederick, and the animals celebrated when they discovered that it was only a ruse apparently meant to drive Frederick's offer higher. Of course, in the end, Frederick's money proved to be forgeries--he had gotten the timber for nothing!--and the animals readied for revenge. Instead, Frederick's men attacked, but the animals drove him away in what would be known as the Battle of the Windmill.
The sale of the pile of timber is an excellent illustration of the kind of manipulation and propaganda Napoleon practised to keep the animals on the farm in a constant state of confusion and uncertainty. Such insecurity enables a tyrant to keep his subjects guessing about the truth and when citizens are unsure in this regard, they can be easily manipulated to believe almost anything. This tactic worked extremely well with the animals, who had hardly ever questioned the motives of the pigs.
At first, Napoleon claimed to have excellent relations with Pilkington and would sell the timber to him. It was claimed that Frederick was desperate to get the timber, but would not settle on a fair price. It was also rumoured that Frederick and his men were planning to attack the farm and destroy the windmill. The animals were obviously outraged at the news. Frederick became their greatest enemy. Terrible stories about Frederick's maltreatment of his animals were also doing the rounds. For these reasons the slogan, "Death to Humanity" was altered to read, "Death to Frederick".
It was therefore a shock when the animals later learnt that Napoleon had actually sold the timber to Frederick! He had been in negotiations with him whilst seemingly also dealing with Pilkington. It was put out that this was a skilful ruse by Napoleon to get a better price for the pile of timber. As an illustration of Napoleon's genius, it was also mentioned that he had refused to be paid by cheque and opted for cash, which Frederick duly offered. It was later discovered that the notes were forgeries. Frederick had received the timber for nothing. The death sentence was announced on Frederick.
To add further insult to their injury, Frederick and his men invaded the farm and blew up the windmill. The destruction of the windmill, however, fired up the animals to such an extent that they attacked the invaders and drove them off the farm after a bloody and vicious battle in which nearly every animal suffered some kind of injury, and a cow, three sheep and two geese were killed.
The irony in this whole episode is that one of the least intelligent animals on the farm, Boxer, recognised the entire sequence of events, culminating in the Battle of the Windmill, for what they really were - a failure, since they had suffered and lost so much: their timber, the windmill, their injuries, the animals killed in battle. It is for this sentiment that he, probably the most loyal animal on the farm, later gets sold to the knacker after he suffers terrible injury.