The next morning, Fagin takes out a box full of jewelry and watches. He notices Oliver observing him. Fagin grabs a bread knife and asks Oliver if he was awake an hour before. Oliver says he was not, and Fagin regains his kindly demeanor.

The Artful Dodger returns with another boy, named Charley Bates. Fagin asks if they worked hard that morning. The Dodger produces two pocketbooks, and Charley pulls out four handkerchiefs. Fagin says that they will have to teach Oliver how to pick out the marks on the handkerchiefs with a needle. Oliver does not realize he has joined a band of pickpockets, so he believes their jokes about teaching him how to make handkerchiefs and pocketbooks.

Dodger and Charley practice picking Fagin’s pockets. Two young women, Bet and Nancy, whom the narrator describes as “remarkably free and agreeable,” drop in for drinks. Fagin gives all of them some money and sends them out. Fagin lets Oliver practice taking a handkerchief out of his pocket and gives him a shilling for a job well done.

For days, Fagin keeps Oliver indoors practicing the art of picking pockets. Oliver notices that Fagin punishes the Dodger and Charley if they return home empty-handed. Finally, Fagin sends Oliver out with the Dodger and Charley to “work.”

After some time, the Dodger notices a wealthy gentleman absorbed in reading at a bookstall. Oliver watches with horror as Charley and the Dodger sneak up behind the man and steal his handkerchief. He finally understands the nature of Fagin’s work.

The gentleman turns and sees Oliver running away. Thinking that Oliver is the thief, he raises a cry. The Dodger and Charley see Oliver running past them, so they join in, crying, “Stop thief!” A large crowd joins the pursuit. A police officer arrives and grabs Oliver by the collar, ignoring the boy’s protests of his innocence. The gentleman who was robbed asks the police officer not to hurt Oliver and follows them to the police station.

The officer locks Oliver in a jail cell to await his appearance before Mr. Fang, the district magistrate. Mr. Brownlow, the gentleman, protests that he does not want to press charges. He thinks he recognizes something in Oliver’s face, but cannot put his finger on it. Oliver faints in the courtroom, and Mr. Fang sentences him to three months of hard labor. The owner of the bookstall rushes in and tells Mr. Fang that two other boys committed the crime. Oliver is cleared of all charges. Pitying the sickly young Oliver, Brownlow takes him into a coach and drives away.

Oliver is delirious with a fever for days. When he awakes, Brownlow’s kindly housekeeper, Mrs. Bedwin, is watching over him. He says that he feels as if his mother has come to sit by him. The story of Oliver’s pitiful life brings tears to Mrs. Bedwin’s eyes. Once Oliver is strong enough to sit up, Mrs. Bedwin carries him downstairs. A portrait of a young woman catches Oliver’s eye and affects him greatly.

Mr. Brownlow drops in to see how Oliver is feeling. Oliver thanks him for his kindness. Brownlow exclaims with astonishment that Oliver closely resembles the young lady in the portrait. Brownlow’s exclamation startles Oliver so much that the boy faints.

From today’s perspective, Dickens’s characterization of Fagin through Jewish stereotypes is one of the more uncomfortable aspects of Oliver Twist. Dickens characterizes Fagin as a “very old shrivelled Jew” with a “villainous-looking and repulsive face.” Victorians stereotyped the Jews as avaricious gold worshippers, and in accordance with that stereotype, Fagin’s eyes “glisten” as he takes out a “magnificent gold watch, sparkling with jewels.” True to the anti-Semitic stereotype, his wealth is ill-gotten—Fagin obtains it by having others do the thieving for him, and some of those others have even been hanged for doing Fagin’s bidding. Dickens’s narrator continually refers to him as “the Jew” or “the old Jew,” seemingly making Fagin into a representative for all Jews. When a Jewish acquaintance later took Dickens to task for his portrait of Fagin, Dickens responded that it reflected nothing other than the fact that a sizable number of the leaders of London thieving rings at the time were Jewish. Despite this answer, it is difficult to accept that his portrayal of Fagin does not involve a certain degree of bigotry.

Fagin also represents a harsh parody of the Protestant work ethic. Oliver is “anxious to be actively employed” because he notices that Fagin’s “stern morality” manifests itself when Charley and the Dodger return home empty-handed. Fagin rails about the “misery of idle and lazy habits” and punishes them by denying them dinner. Victorians castigated the poor for laziness, but the work ethic they preached was in some ways responsible for creating the perversion of that ethic that Fagin represents. As a result of the “stern morality” of charitable institutions, paupers have to choose between the harsh conditions of the workhouses and the harsh conditions of the streets. Because begging is a punishable offense, those who stay outside the workhouses are often forced to turn to crime in order to survive.

Oliver’s experience in the courtroom highlights the precarious position of the poor in the eyes of the law. Mr. Fang is an aptly named representative of the English legal system. The law has fangs ready to devour any unfortunate pauper brought to face “justice.” Without hard evidence or witnesses, and despite Brownlow’s testimony that he does not believe that Oliver is the thief, Mr. Fang convicts Oliver and sentences him to three months of hard labor. In Oliver’s weakened condition, the sentence is really a sentence of death.

Oliver’s inability to speak at his trial, caused by his exhaustion and sickness, metaphorically suggests the lower class’s lack of political power and ability to voice its own concerns in a public forum. In 1830s England, the right to vote was based on wealth, so the poor had no say with respect to the law. Moreover, the upper classes project their own conceptions of the poor upon them—to the point of blithely redefining poor people’s identities with no regard for the truth. Oliver cannot even say his name due to exhaustion and terror, so a court officer gives him the false name of “Tom White.” This process of inaccurate renaming occurs throughout the hearing, as Oliver is falsely named a “young vagabond” and a “hardened scoundrel” before he is eventually falsely declared “guilty.” But the name “Oliver Twist” is, in fact, no more authentic, as Mr. Bumble invents this name when Oliver is born. As these examples demonstrate, Oliver’s identity has been determined by other, more powerful people throughout his life.

Oliver enters a new world when Brownlow takes him home. The English legal system and the workhouses represent a value system based on retribution, punishment, and strict morals. The Brownlow household, in contrast, operates on a basis of forgiveness and kindness. After a life of false names and false identities imposed by others, Oliver comes into contact with a portrait of a woman he closely resembles. With this event, the novel’s central mystery—Oliver’s true identity—is established. In contrast to the courtroom, where a multiplicity of incorrect identities are forced upon Oliver, in the Brownlow home, Oliver’s resemblance to the woman’s portrait suggests the elusive nature of his true identity.