George thanks Slim for Lennie's new puppy. Slim asks the question that's on everyone's mind, wanting to know why a "cuckoo" like Lennie and a "smart little guy" like George are traveling around together.
Because Slim is a good guy, George tells him everything: that George knew Lennie's Aunt Clara, that he used to tease Lennie mercilessly until he realized how loyal Lennie was to him, that Lennie isn't exactly crazy, just dumb, that he's gotten used to Lennie's annoying ways, and that he's seen guys that go around by themselves and those guys get lonely and mean.
So he and Lennie stick together.
George also tells Slim what happened in Weed with the girl in the red dress—she got frightened of Lennie's petting, cried rape, and he and Lennie had to run for their lives, or at least run and hide in a muddy ditch for a while.
Slim decides that Lennie "ain't mean…he's jes like a kid."
If by "kid" you mean a very large and enormously powerful, full-grown man with a tendency to pet things to death.
Carlson comes in and complains again about the smell wafting off of Candy's dog and offers to shoot the creature with his trusty Luger.
Candy is miserable, since loves his old companion and can't bear the thought of killing him.
Slim, surprisingly, sides with Carlson: he'd want to be shot if he were old and crippled.
Whit, another ranch hand, engages George in conversation about Curley's wife, who he says is a "loo loo." They agree that Curley has "yella-jackets in his drawers" and his pants "is just crawlin' with ants," all of which apparently means that Curley's wife's crazy sexuality has pumped up Curley's sexuality.
George wisely observes that Curley's wife is "gonna make a mess."
All this talk about sex leads Whit to invite George along on the Saturday-night-trip to the local brothel.
Hm, George says. Two dollars and fifty cents is a bit rich for his blood.
Sure, Whit says; you can get it cheaper at Clara's brothel, but Suzy's house is cleaner and Suzy tells better jokes.
Since George apparently loves a madam with a sense of humor, he's swayed by these selling points.
And then a whole bunch of people come in: Lennie; Carlson, tactlessly cleaning his gun; and Curley, looking for Mrs. Curley.
He hears that Slim is out in the barn and immediately fills in "… having sex with my wife," and storms off.
Whit and Carlson follow, excited for a fight.
George tells Lennie he'd take a good brothel over "jail bait" any day: at least with a brothel you know ahead of time what you're getting and how much it's going to set you back.
We get the feeling that "jail bait" means any woman who doesn't post her price clearly.
All this talk of sex is boring Lennie, who begs to hear the dream-farm story again. George complies.
Candy overhears this discussion and offers to chip in 300 dollars if they'll let him live at the farm, too.
Carlson gets ready to cart Curley off to the doctor, and Slim shuts the situation down: he tells Curley to say that he got his hand caught in a machine. If he tries to get Lennie fired, Slim will tell everyone what really happened.
Moaning and crying, Curley agrees.
Lennie is scared that—because he has done a "bad thing"—George will no longer let him tend the rabbits. No, no, George reassures him: any future rabbits are his to tend, and tells him to go wash the blood off..