Bilbo and dwarves are hopelessly lost, so they simply pick a direction and walk. Shortly after they set out, the wood-elves capture them. The dwarves are so hungry and sick after the spider attack that they are actually relieved. They lay down their weapons and allow themselves to be marched to the Elvenking’s castle. Only Bilbo is not captured. He puts on his ring and follows at a distance.

The Elvenking questions the dwarves closely, but they refuse to tell him why they have come to his forest or where they are going. Frustrated, the king has them all locked up in separate cells. For many long days they stay there, with plenty to eat but no way out. Bilbo, meanwhile, wanders invisibly through the castle in despair. He is unwilling to leave his friends but unable to find a way to save them. He slips in and out of the gates several times, but he sees no way to get the dwarves out without starting a fight they would have no hope of winning.

Eventually Bilbo discovers Thorin locked away in a particularly deep cell. Eventually he finds a chance to approach when the hall is deserted, and he whispers to Thorin through the keyhole. Thorin is thrilled. After hearing of Bilbo’s success against the spider, he seems sure the little hobbit will think of a way to help him and his fellow dwarves escape. Bilbo dislikes being in charge of the escape plan. For a long time he cannot think of anything to do. Eventually, however, he discovers another entrance to the castle: a stream runs out through a water-gate. Every now and then the elves dump empty wine and food barrels into this stream, then they open the gate to allow the barrels to float down the river. This gives Bilbo an idea.

One day Bilbo is lucky enough to discover the castle butler and chief guard both passed out from drinking too much wine. Bilbo steals the butler’s key ring and releases the dwarves from their imprisonment. He leads them to the back of the castle, where the latest group of empty barrels stands waiting to be deposited into the stream. The dwarves dislike the idea of hiding inside the barrels, but they see no other way out, so they allow Bilbo to pack them inside. When the castle servants dump the barrels into the steam, Bilbo hops into the water and clings to a barrel, allowing himself to be swept out the water-gate and down toward the edge of Mirkwood.

The barrels float to a bend in the river, where a group of raft elves gather them and tie them up for the night. The dwarves are not yet far enough from the Elvenking to be safe, so they have to sit inside their barrels and wait through the hours of darkness. The next morning, the raft elves tie the barrels together and float them farther downstream toward the Long Lake, which sits at the base of the Lonely Mountain.