The general is a madman. The reason why he created the new "animal" to hunt is out of sheer boredom. According to the general, he hunted far and wide, and there was no animal that could stand up against his hunting prowess. So, he was tired of hunting animals. He wanted something else to hunt.
More specifically, he wanted an animal that could reason. This ability to reason offers a challenge for the hunter and creates an element of danger. This point, in turn, gives the general pleasure. Here is what the general says to Rainsford:
"Precisely," said the general. "That is why I use them. It gives me pleasure. They can reason, after a fashion. So they are dangerous."
Here is another quote:
"I wanted the ideal animal to hunt," explained the general. "So I said, `What are the attributes of an ideal quarry?' And the answer was, of course, `It must have courage, cunning, and, above all, it must be able to reason."
As the general is speaking, Rainsford gets the distinct feeling that he will be the next prey.