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This chapter shows how Napoleon rules the farm. At first the animals are happy, thinking that they are doing everything for their own good. They work hard, putting in sixty-hour weeks throughout the spring and summer. In August Napoleon announces that there must be voluntary work on Sunday afternoons, and the absent ones will receive half rations. In spite of the intense labor, harvest is less successful than that of the previous year. The Windmill also presents unexpected difficulties, but they are resolved under the superintendence of the pigs and the noble efforts of Boxer, who lives by the slogans of "I will work harder" and "Napoleon is always right".
Napoleon announces a new policy of engaging in trade with the neighboring farms, not for commercial purposes, but for obtaining urgent necessities. The animals have always lived by the commandment of not human contact, and now they feel uneasy about the violation of the commandment. Four pigs timidly raise their voices in protest, but they are silenced by the fierce growling of Napoleon's dogs. The leader then says that the animals need not contact humans because he himself has taken the responsibility of doing so. Napoleon ends his speech with 'Long Live Animal Farm'. After the singing of the 'Beasts of England', the animals disperse and begin to grumble about Napoleon's new policy. As usual, Squealer, the propagandist, assures the animals that the resolution against engaging in trade had never been official.
Every Monday, Mr. Whymper, a sly-looking man, visits the farm. He is the first contact with the outside world, but there are rumors that Napoleon is about to enter a definite business agreement either with Mr. Pilkington or with Mr. Frederick. Napoleon and his pigs also take up residence in the farmhouse, stating that they need a quiet place to do their thinking work. They also claim that a leader needs the dignity of a house. Another of the seven commandments is broken since they stated that "No animal shall sleep in a bed with sheets".
In autumn the animals are tired but pleased, for the windmill is half-built. Only the skeptical Benjamin refuses to admire the work. In November, progress is stopped by the weather, but Napoleon forces the animals to continue building the windmill through the rain and cold. When a violent storm rocks the farm buildings and the trees and knocks the windmill down, Napoleon blames the poor weather on Snowball. He offers a reward and a title to anyone who captures him alive, for he wants to teach the pig a lesson.
Napoleon has become dictatorial in his leadership. The animals are no longer allowed to participate in decision making. Napoleon alone makes the rules. He forces them to work sixty-hour weeks and then adds Sunday afternoon to their workloads. He insists that the labor on the windmill continue in spite of the cold and rain. He seizes the farmhouse for his own residence and begins trading with humans on the neighboring farm. He also confers titles and honors, expels animals who he feels are traitors, and silences dissenting voices. When the animals complain about any of his polkas, they are quickly quieted by the propaganda of Squealer. They are helpless to fight against Napoleon and his refusal to follow the seven commandments.
Since they can no longer function as they choose, the animals think largely about their own lack of comfort. They begin to compare their present life to their past one under Farmer Jones. Ironically, there are many similarities, even though Napoleon and Squealer constantly tell them that their present life is much better than their past one. Of course, like most dictators, Napoleon has tried to change their memories of the past, just as he changes the seven commandments to suit his needs.
Napoleon works hard at keeping the animals in control, constantly assuring them that he is making a better society for them and trying to appear like a hero. He makes Snowball into his scapegoat and blames all bad events, including the weather, on him. By making Snowball a fearful character, Napoleon assures his subjects that he will protect them from this horrible creature. Such tactics make the animals dependent on his leadership and divert attention away from his dictatorial ways. The building and rebuilding of the Windmill and other such plans are also Napoleon's way of keeping the common "man" busy and at bay so they will not have time to think about what he is really doing. These plans are reflective of Stalin's Five-Year Plans.