J. R. R. Tolkien, a devoted and believing Roman Catholic, did not avoid giving his works a moral dimension; he most surely would have been bored by fictions that lacked one. It is not difficult, therefore, to find that in The Hobbit, characters make choices that count, that they are held accountable for their behavior, that the good characters value mercy, and that a benevolent providence shapes the characters’ ends.
Bilbo’s kindness in sparing Gollum can only be fully appreciated in The Lord of the Rings, when Frodo, Bilbo’s nephew and the trilogy’s protagonist, will even more explicitly pity Gollum, an act which indirectly saves Frodo’s own life. Bilbo rejects the temptation of the dragon’s treasure, an act which keeps him safe in the final battle. By contrast, Thorin’s refusal to compromise leads eventually to his death. One can also better understand the real heroism of Bilbo at the start of The Lord of the Rings: Of all the characters in either story, only Bilbo freely surrenders the ring to another in a peaceful situation after calm reflection.
Tolkien’s heroes always have significant moral choices to make: They always value mercy over power or possessions. They pass the test. If they are rescued in the final, almost hopeless crisis, that providential intervention comes with a sense of justice, a sense that life is not meaningless or hostile to human values. One could forcefully argue that the hobbits are Tolkien’s parable of the theme that the meek shall indeed inherit the earth.