what does the fox means by this ("Oh! that you would eat the dead and not the living.") ?
A Bear boasted very much of his philanthropy, saying that of all animals he was the most tender in his regard for man, for he had such respect for him that he would not even touch his dead body. A Fox hearing these words said with a smile to the Bear, "Oh! that you would eat the dead and not the living."

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Hi.
It is difficult without more context to be 100% definite.
However, it looks like the fox is saying : (It would be better) that you would eat the dead and not the living.
Perhaps the fox is afraid the bear will eat him?
Or maybe the fox is playing with the bear and being sarcastic. Maybe he is suggesting that the bear's statement is consistent with him eating humans alive, which is even worse than eating them when they are dead.?