“Thank you, Good People! And good night!” said Gandalf, who came last.

“Good night!” answered elves.

And so at last they all came to the Last Homely House, and found its doors open.

They stayed long in that good house, fourteen days at least, and they didn’t want to leave.

The master of the house was a friend of elves – one of those people whose fathers came into the history before the wars of the evil goblins and the elves and the first men in the North. In those days there were still some people who had both elves and heroes of the North for ancestors, and Elrond the master of the house was their chief. He was noble and good-looking, as strong as a warrior, as wise as a wizard, as respected as a king of dwarves, and as kind as summer. His house was perfect.

All of the guests, the ponies as well, grew refreshed and strong in a few days there. Their clothes were mended. Their bags were filled with food. Their plans were improved with the best advice. So the time came to leave, and they went on again with the early sun on midsummer morning.

Elrond knew all about runes of every kind. That day he looked at the swords they had brought from the trolls’ place, and he said: “These were not made by trolls. They are very old swords of the High Elves of the West. They were made in Gondolin for the Goblin-wars. Keep them well!”

“We will do that,” Thorin and Gandalf said.

Then Erond looked at their map. The moon was shining brightly. He held up the map and the white light shone through it.

“What is this?” he said. “There are moon-letters here, beside the plain runes which say ‘five feet high the door and three may walk abreast.’”

“What are moon-letters?” asked the hobbit full of excitement. He loved maps, and he also liked runes and letters.

“Moon-letters are rune-letters, but you cannot see them,” said Elrond, “not when you look straight at them. They can only be seen when the moon shines behind them. The dwarves invented them and wrote them with silver pens.”

“What do they say?” asked Gandalf and Thorin together.

“Stand by the grey stone when the thrush knocks,” read Elrond, “and the setting sun with the last light of Durin’s Day will shine upon the key-hole.”

“Durin, Durin!” said Thorin. “He was the father of the fathers of the eldest race of Dwarves, the Longbeards, and my first ancestor: I am his heir.”

“Then what is Durin’s Day?” asked Elrond.

“The first day of the dwarves’ New Year,” said Thorin, “when the last moon of autumn and the sun are in the sky together.”

Then Elrond gave the map back to Thorin; and then they went down to the water to see the elves dance and sing.

The next morning they rode away, with their hearts ready for more adventure. Now they knew the road that they had to follow over the Misty Mountains to the land beyond.

The way was long and dangerous. Once there was a terrible thunderstorm, and the dwarves found a dry cave to spend there some time.

It seemed not too large and mysterious. At one end there was room for the ponies. Oin and Gloin wanted to light a fire at the door to dry their clothes, but Gandalf didn’t let them do it. So they put their wet things on the floor, and took dry ones out of their bags; then they made their blankets comfortable, got out their pipes and blew smoke rings. They talked and talked, and forgot about the storm, and discussed what each would do with his share of the treasure; and so they fell asleep one by one. But Bilbo could not go to sleep for a long while; and when he fell asleep, he had very nasty dreams. Suddenly he woke up and saw that a crack had opened at the back of the cave, and was already a wide passage. He was just in time to see the ponies’ tails disappearing into it. Of course he gave a very loud scream.

Out jumped the goblins, great ugly-looking goblins, lots of goblins. There were six to each dwarf, at least, and two even for Bilbo; and they were all grabbed and carried through the crack. But not Gandalf. Bilbo’s scream had wakened him up at once, and when goblins came to grab him, there was a terrible flash like lightning in the cave, and several of them fell dead.

The crack closed, and Bilbo and the dwarves were on the wrong side of it! Where was Gandalf? It was very dark. The passages there were crossed in all directions, but the goblins knew their way. The goblins were very rude, and laughed in their horrible voices.

Now there came a red light before them. The goblins took out whips and whipped the dwarves and Bilbo and forced them to run. Soon they came into a big cavern. There was a great red fire in the middle, and there were torches along the walls, and it was full of goblins. They all laughed and clapped their hands, when they saw the dwarves and little Bilbo. The ponies were already there; and all the packages were broken open.

That was the last time they saw their little ponies, because goblins eat horses and ponies and donkeys, and they are always hungry. Now the goblins chained the prisoners’ hands and linked them all together in a line and dragged them to the far end of the cavern.