Oliver wakes up late the next morning. Only Fagin is in the room. He keeps a sharp ear out for any noise.

Believing Oliver is still asleep, he withdraws a box from a hiding place after locking the door. The box contains fine jewelry and watches.

Fagin notices Oliver watching him and closes the box. He picks up a knife. He demands to know what Oliver has seen. Oliver tells him he just woke up and hadn’t meant to disturb him. Fagin believes him and jokes with Oliver that he was only testing to see how brave he is. He praises Oliver’s courage. He asks Oliver if he saw the trinkets. Oliver admits this. Fagin tells Oliver that the jewelry is his.

Dodger and his friend Charley Bates come back. They have breakfast. Fagin asks if they’ve been working. Dodger replies that he got a few pocketbooks. Bates got some handkerchiefs. Fagin asks Oliver if he would like to learn their trade. Oliver innocently replies he would. Charley laughs at his naïveté, but Dodger is more protective.