J. R. R. Tolkien

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Why did the ring cause Bilbo minimal harm and allow him to relinquish it?

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You can find the answer to your question in both The Hobbit and The Lord of the Rings.

In The Lord of the Rings, Gandalf explains to Frodo that two qualities protected Bilbo from the evil effects of the ring. The wizard names "pity" and "mercy" as the two qualities. Because of his charity, Bilbo did not use the ring against Gollum.

Remember that Bilbo could have used the ring to disappear before stabbing Gollum to death. For his part, Bilbo's mercy stayed his hand. According to the story, Bilbo's strength of character protected him for a long time from the malignant effects of the ring. Put another way, the ring supposedly had little influence on someone who exhibited such unselfish qualities.

He was desperate. He must get away, out of this horrible darkness, while he had any strength left. He must fight. He must stab the foul thing, put its eyes out, kill it. It meant to kill him. No, not a fair fight. He was invisible now. Gollum had no sword. Gollum had not actually threatened to kill him, or tried to yet. And he was miserable, alone, lost. A sudden understanding, a pity mixed with horror, welled up in Bilbo’s heart: a glimpse of endless unmarked days without light or hope of betterment, hard stone, cold fish, sneaking and whispering. (from The Hobbit)

In The Hobbit, Bilbo pictured the utter loneliness Gollum endured on a daily basis. He knew that the creature's days were spent in misery; Gollum had no friends. He had been deserted by all, and the ring's malignant power weighed heavily upon him as time progressed.

'But this is terrible!' cried Frodo. 'Far worse than the worst that I imagined from your hints and warnings. O Gandalf, best of friends, what am I to do? For now I am really afraid. What am I to do? What a pity that Bilbo did not stab that vile creature, when he had a chance!' 'Pity? It was Pity that stayed his hand. Pity, and Mercy: not to strike without need. And he has been well rewarded, Frodo. Be sure that he took so little hurt from the evil, and escaped in the end, because he began his ownership of the Ring so. With Pity.' (from The Lord of the Rings)

In The Lord of the Rings, Frodo maintains that Gollum deserves to die, after all the horrible deeds he committed. However, Gandalf reminds Frodo that Gollum's fate is tied up with the ring.

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