Catchfools is a city in the Land of Barn Owls (Italian: Paese dei Barbagianni) where every animal in town has done something exceedingly foolish and now suffers as a result.
As he travels through the streets of Catchfools, Pinocchio sees that the streets are filled with hairless dogs yawning from hunger, sheared sheep trembling with cold, chickens with no combs and wattles begging for a grain of wheat, large butterflies unable to use their wings because they sold all their lovely colors, tailless peacocks ashamed to show themselves, and bedraggled pheasants scuttling away hurriedly and grieving for their bright feathers of gold and silver lost to them forever.
Upon reaching the Field of Miracles, Pinocchio buries his coins, uses water from the canal to pour over it, and then leaves for the "twenty minutes" that it will take for his gold to grow.
Fortunately for Pinocchio who spends some time in prison, all criminals are released early by the jailers when the Emperor declares a celebration following his army's victory over the town's enemies.
Upon being released by stating to the jailer that he is a criminal, Pinocchio leaves Catchfools and heads back to The Fairy with Turquoise Hair's house in the forest.