Bilbo, riding atop the barrels, comes into some flat land and finally spies the Lonely Mountain. He also learns that he and the dwarves, despite their misadventure, have probably come in the only safe way they could have, for the Forest Road no longer comes to a sure end, and it is no longer safe. We learn that Gandalf has learned of this as well and is on his way to look for the party (201–203).
After a long day, the river rushes into the Long Lake and the narrator reminds the reader of the lay of the land through Bilbo’s remembering of the map he had seen in his own home. Then the town built out on the water is briefly described as is the legend of gold flowing once more at the return of the dwarves to the lonely mountain (203–205).
The barrels are pulled into a little bay and the elves and men go to feast in Lake-town. Thorin is the first dwarf Bilbo un-crates, and he is none too happy, but Bilbo talks sense into him that they must rescue the rest of the poor dwarves, and so they do. Eventually all are found, some in better shape than others, but all alive (205–207).
So while the rest recover on the shore, Thorin, Fili, Kili, and Bilbo approach the guards and Thorin announces himself. This causes quite a commotion. Thorin and the guards exchange conversation, and Thorin demands to be taken to the Master of the town, which the guards eventually do. Thorin then announces himself at the feast. This too causes quite a commotion, but a different one. The elves who are present relate that Thorin and company are escaped vagabond prisoners. The Master is inclined to believe the elves over Thorin. But while the Master of the town hesitates, the news spreads and songs of old begin to be sung—even though it is Thror’s grandson, not Thror himself who has returned (207–210).
Even though the Master is still not sure, he goes along with the general excitement. The rest of the dwarves are brought in and cared for as well. Bilbo is also shown honor despite the fact that nothing of his sort ever shows up in any of the old songs—another part of the old legends that is overlooked in the general excitement and fervor that gold shall flow once again from the mountain. (210–212).
The elven king, of course, soon learns what became of his prisoners, and he thinks to himself that the treasure—if it is gotten at all—shall have to come back that way. He, however, doesn’t think they stand a chance. Thorin realizes that he needs the help of the town and decides to act before the hubbub dies down. At this the Master actually begins to wonder if maybe Thorin is who he says he is. He didn’t actually believe that Thorin and company would go to the mountain. The Master is glad to get rid of them for they are expensive and the excitement has turned things into an extended holiday. So the dwarves set out laden with goods in three large boats, while packed ponies go along the shore to meet them at the landing place. Bilbo is most unhappy (212–213).