Stories are mostly written in simple past tense.(let's call it past 1) To explain an event that happened even before past 1 we use past perfect tense.(let's call it past 2) Now if we want to add a dialogue in past 2, what shall we write 'he said" Or "he had said"?
Like:
He had sold the monkey.
"It is another mouth to feed," he said/ he had said/he would say.