Cervantes says that Cide Hamete Benengeli blesses Allah before recounting that Don Quixote and Sancho once again go on the road. He begs us to forget the past adventures and pay attention only to what is to come. Don Quixote and Sancho think it a good sign that Rocinante and Dapple bray and stamp as they set out. Sancho thinks it an especially good sign that Dapple whinnies louder than Rocinante does. Cervantes interjects to say that Benengeli’s history does not indicate whether Sancho’s belief is based on astrology.
Don Quixote decides to go to El Toboso to visit Dulcinea. On the road, he and Sancho discuss the importance of fame. Don Quixote says that people value fame even in its negative form. Sancho says he believes they should try to become saints rather than knights because saints go to heaven. Don Quixote argues that the world already has enough saints and that he was born to be a knight-errant.
Don Quixote and Sancho decide to enter El Toboso at night. Sancho panics because he does not know which house is Dulcinea’s, even though he supposedly visited her to give her Don Quixote’s letter in the First Part. The two run into a ploughman who tells them he does not know of any princesses in the area. They go outside the town to sleep.
Cervantes says that the author, presumably Cide Hamete Benengeli, wanted to skip this chapter for fear that he would not be believed but decided to write it anyhow. Don Quixote dispatches Sancho to fetch Dulcinea and bring her to him. Sancho panics because he has never seen Dulcinea and fears he will be attacked if people see him wandering around the town looking for women.
Sancho sits down for a while and has a lengthy dialogue with himself. He concludes that he can fool Don Quixote by abducting the first peasant girl he sees riding on the road and presenting her as Dulcinea. Sancho sees three young peasant girls riding. Cervantes says that the author does not clarify whether these girls are riding on horses or donkeys. Sancho rushes to Don Quixote and informs him that Dulcinea is approaching with two maids on horseback, but Don Quixote objects that he can see merely three peasants on donkeys.
As the girls ride by, Sancho grabs one of them and falls down on his knees before her, praising her as Dulcinea. Though appalled by her appearance—and especially by her smell—Don Quixote believes that she is Dulcinea. He says that a wicked enchanter who wants to deny him the pleasure of seeing Dulcinea’s beauty has changed her into a peasant. Sancho describes Dulcinea to Don Quixote as he claims he saw her, including a mole with seven or eight nine-inch hairs coming out of it.
In your analysis of the second part of Don Quixote, you write: "The story of Anna Felix and Don Gregorio tempers Cervantes’s otherwise rampant racism" - Really? This is a masterpiece that has survived the centuries because of it's jawdroppingly brilliant use of irony, but you can't seem to notice the difference between the first narrator (Cide Hamete's translator) and Cervantes himself!
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Any analysis of Don Quixote that doesn't mention the fact that that book is, at the core, a meditation on individual liberty, monetary debasement and the moral horror of involuntary slavery, is incomplete. See the work of Eric C. Graf of Universidad Francisco Marroquín. His article-
Juan de Mariana and the Modern American Politics of Money: Salamanca, Cervantes, Jefferson, and the Austrian School