Thorin makes a grand speech about the time for Bilbo to show why he came along in the first place. Bilbo becomes impatient at the long speech and tells Thorin to get on with his request. He asks who is coming with him, but only Balin agrees to go a little way inside. Tolkien then describes these dwarves as no heroes but loyal enough in a pinch (224–225).
So they begin their descent with Balin stopping when he could just make out the faint light from the door. Bilbo slips on the ring, and with fear and determination goes on. As he gets closer to his destination, four things happen. He begins to see a reddish glow; it becomes quite warm; he hears the dragon snoring; and he does the bravest thing he ever does: he goes on. What he sees at the bottom is a giant room and the glow of Smaug (225–227).
In addition to the red-golden dragon sleeping, Bilbo spies countless treasure on the floor and in jars and on the walls and under the dragon. He becomes enchanted by it all, almost forgetting the dragon. He slips out of the tunnel, grabs a two-handled cup, and races back up the tunnel before the dragon awakes. He enjoys the feel of fresh air as the dwarves fall all over themselves in delight. (227–228).
“It does not do to leave a dragon out of your calculations, if you live near him.” As the dwarves reveled, a vast rumbling occurred beneath and everyone cowered in fear. Then we learn the cause. Smaug wakes from a dream and has a sensation of a strange air. He wonders about the hole and the noise he has thought he heard lately coming from that direction. Then he notices the cup missing. Smaug then heads for the front gate in rage (228–230).
Bilbo rouses the dwarves from fear and herds them into the tunnel—once again saving their lives. Then they realize that Bombur and Bofur are still below. Thorin refuses to leave them, but does send Bilbo, Balin, Fili, and Kili into the tunnel so they won’t all be caught outside, and the rescue mission begins. They just haul up the two dwarves and some of their tools, when they hear the whirring of the dragon. The ponies bay and break their ropes and the dragon pursues them. The party crouches in fear in the tunnel as the dragon hunts for them throughout the night, but he never spies the little enclosure or door. At morning light he returns to his den to sleep, but he doesn’t forget (230–232).
The party debates what to do next, knowing they must wait a long time for the dragon to relax his guard. They then begin to grumble at Bilbo for stealing the cup and stirring up the dragon’s wrath. When they finally calm down over this, they ask Bilbo’s advice, and plainly enough he tells them they certainly should stay in the tunnel at night, but it should be safe enough to steal out during the day to take some air, and it might also be possible to send one or two to their stores down the mountain to replenish their supplies as needed. Then Bilbo says he will creep back down and see what the dragon is up to. He does so about noon, still feeling scared, but too overconfident. He does not know that while he may be invisible, dragons can smell quite well and sleep with one eye open. (232–234).
Smaug addresses Bilbo, and Bilbo begins to talk to the dragon as one is supposed to, with honor and riddling talk; however, Bilbo gives away far more than he probably intended to. Smaug surmises enough to think that Bilbo’s origins have something to do with the Lake-men, and he means to remedy the situation. Smaug then tells Bilbo that he knows he has been with dwarves—the smell—and then he begins to put doubt in Bilbo’s mind about the trustworthiness of the dwarves (234–236).
The dragon’s persuasion begins to work on Bilbo as he is “beginning to feel really uncomfortable.” And Bilbo is in danger of both falling under the dragon’s spell and spilling the beans completely and also of disbelieving the intentions of the dwarves. Bilbo then tries to counter Smaug’s deceit by mentioning it is not only gold they have come for but revenge. This sends Smaug into laughter. But Bilbo pounces on Smaug’s boasting of his strength and “armour” and gets Smaug to show him his underbelly. And there Bilbo spies an exposed area in his left breast. At this Bilbo says he must be going, and almost gets singed in the process with the parting shot of “Ponies take some catching, I believe, after a long start. And so do burglars.” (236–239).
Bilbo arrives back at the doorstep in the late afternoon, and the dwarves have difficulty getting much of the story out of him. Bilbo in his ill humor even throws a stone at the old thrush, but Thorin tells him to leave the bird alone. And Bilbo finally relays the story—including the bare spot, which leads to talk of various means of dragon killing. Bilbo finally interrupts this talk admitting his uncomfortableness and urging the dwarves into the tunnel. Despite their protests, Bilbo does manage to get them back inside. Before he does, the thrush flies off having listened to the whole conversation. As they sit in the tunnel, the talk of the hoard does come up and Thorin assures Bilbo they will help in whatever way they can to make sure the treasure is delivered as promised (239–243).
Talk then turns to the actual treasure below: weapons and cups and jewels—and the Arkenstone. Bilbo grows more and more uncomfortable sitting near the door and finally begs them to shut the door, even though they do not know if they will be able to open it again once shut. When they shut the door, there is no trace of the key hole, and they are finally shut inside the mountain—for good. This happens just in time, for they have just moved down the tunnel, when Smaug attacks the outside. After this destruction of the doorway and side of the mountain, Smaug sets off for Lake-town (243–245).