On the way to the Long Lake, Bilbo eavesdrops on the raft elves’ talk and learns that floods and earthquakes have made the land around the Lonely Mountain extremely treacherous. The paths that lead out of Mirkwood are overrun by swamp, leaving the river—the very path Bilbo and the dwarves are traveling—as the only safe route. This information does little to cheer Bilbo, who is wet, cold, and uncomfortable. Besides that, the sight of the Lonely Mountain fills him with dread.

In the wasteland around the Lonely Mountain, one human community has survived: Lake-town. It is built on platforms on the Long Lake. Leaving the barrels at the entrance to the village, the raft elves go up to meet the town’s Master for a feast. When they are gone, Bilbo sets to work untying the barrels and letting the dwarves out. The dwarves are battered, starving, and half-drowned after their uncomfortable journey down the river. Many of them can hardly move. Thorin, Fili, Kili, and Bilbo leave the worst sufferers on the bank of the river and walk up to the town to announce their presence.

The townspeople are gathered at a feast with the raft elves. Thorin marches in and announces that he is the heir to the throne of the Lonely Mountain. The town’s Master thinks immediately that Thorin is a fraud, but the townspeople have many legends about the King under the Mountain and the riches that will be brought by his return. The people cheer and celebrate. The Master decides that he has no choice but to pretend to be happy to see Thorin and his company. He gives the dwarves a house to stay in and he orders his people to feed them and help the ones who are injured.

The raft elves are less happy to see the travelers. They protest that the dwarves are the Elvenking’s prisoners, but Thorin points out that elves cannot imprison the guests of a town of men. The raft elves leave angrily and carry the story back to the Elvenking. Unlike the men, the king does not believe that the dwarves will kill the dragon, Smaug. He thinks they must be planning a burglary instead. The Elvenking is angry at being outsmarted by the dwarves and resolves to make it difficult for them to carry their spoils back through his territory.

The dwarves spend a week healing and resting, and then Thorin goes to tell the Master of Lake-town that they will soon continue on to the Lonely Mountain. This surprises the Master, who never expected the dwarves to make an actual attempt to fulfill the prophesies of his people. He offers boats and supplies, and the travelers set out once again.