Frederick's scheming represents Hitler's breaking of the non-aggression pact he signed with Stalin.
When Napoleon is trying to decide what to do with his big pile of timber, he notices that Frederick is "the more anxious to get hold of it, but he would not offer a reasonable price" (8.6). Meanwhile, Napoleon's relations with Pilkington were "almost friendly" (8.7). As the animals become aware of what a threat Frederick might present, Napoleon teaches them to chant "Death to Frederick" (8.8). Easy decision: sell the timber to Pilkington!
Except not. To everyone's surprise, Napoleon swaps sides and sells the timber to Frederick supposedly so Frederick would raise his price. But Frederick has the last laugh: he gives Napoleon fake money and gets the timber for free. Playa played!
Here's the real story: Stalin (Napoleon) and Hitler (Mr. Frederick) were mortal enemies. The Nazi Party was super opposed to communism, what with them being fascists (even though "socialist" was actually in the full name of the Nazi party—go figure). Stalin, meanwhile, was in theory super opposed to fascism—so much so that he almost signed an anti-German political alliance with France and Britain (represented by Mr. Pilkington) in the late 1930s.
When that fell through, Stalin basically stuck out his tongue at Britain by signing a non-aggression pact with Hitler instead (August 1939). The pact divided up Eastern Europe into German and Soviet realms of influence. Mortal enemies become BFFs.
Except, again, not. In early 1941, Stalin's spies told him that Hitler was planning to break the pact, but he couldn't believe the Germans would invade Russia before defeating Britain. But they did. In June 1941, Hitler launched Operation Barbarossa. Millions of German troops poured into Soviet territory.
It's a little more dramatic than forged money, no?