Where does the red pony come from? How did Carl get him? What else comes with the gift of the pony?

In the book, Jody finds a new, red pony waiting for him in the barn one morning. However, even before he manages to get used to the idea of a pony in his life, his no-nonsense father, Carl, gives him an ultimatum. Carl orders Jody to carefully care for the pony, or he will sell it.
Later, Jody finds out how the pony was acquired. According to Billy, Carl had bought the pony at a sheriff's auction. A traveling circus had amassed too many debts and had gone out of business in Salinas, so the sheriff had taken it upon himself to sell what remained of the circus' properties at the auction.
Obviously pleased with the horse, Jody then asked if there was a saddle. Billy then takes Jody to the saddle-room; this is where he takes down a saddle of red leather for Jody. So, along with the pony, Jody receives a shining, red leather saddle to use when he rides.