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.