Мм,not sure how to say in English.I read the text once again- that's sth like re-telling The one says: "Everybody has children" and the other says "He said, everybody ...." (I'm not sure how was that about the indirect speech :blush like the language in the fairytales I hope I helped you!
It's an indefinite form, there is no anything like "he said". Just past simple tense. It's exactly as I translated it. Besides it's not "many" but "several children"!