The dwarves begin to despair, since they have no way out of the mountain. Strangely, Bilbo feels more hopeful than he had before—he urges the dwarves to follow him down the Smaug’s lair. The group travels down through the mountain, cautious even though they think Smaug is outside.
Bilbo’s hope is an important weapon in the group’s conflict with Smaug. He first develops this sense of optimism when he’s trapped under the Misty Mountains, and it serves him well when he’s trapped under the Lonely Mountain.
Bilbo explores Smaug’s pile of treasure, and urges Oin and Gloin to make fire; while they do so, he finds the Arkenstone, the gem Thorin had previously mentioned. Bilbo keeps the stone for himself, reasoning that Thorin told him he could keep any fourteenth share of the treasure he desired, though he still feels guilty about taking what is surely the most beautiful part of the treasure.
The fact that Bilbo takes the Arkenstone reveals several things. First, it shows that he’s taken Smaug’s words to heart, and is worried that he’ll be unable to collect his fourteenth share of the treasure later. Second, it shows his nimbleness with words, since he’s interpreting Thorin’s promise that he can choose his fourteenth of the treasure given near the end of Chapter 12 to mean that he can take any part of the treasure he wants. Finally, it shows that even Bilbo isn’t immune to the hypnotic effects of treasure. Overall, he seems uninterested in material wealth, but here, he changes his tune.
The dwarves are glad to see their treasure, and fill their pockets with whatever they can carry. Thorin wears regal armor and gives Bilbo a mail coat, which he accepts despite thinking that he must look ridiculous.
Bilbo rejects the pomp and pageantry of heroism—he’s largely happy to be a humble hobbit, without any fancy armor.
Thorin guides Bilbo and the dwarves along the Running River, which leads from the inside of the Lonely Mountains to the Front Gate, overlooking the ruined town of Dale. Bilbo suggests that they move far away from the Gate, since Smaug will pass through it when he returns, and the dwarves move toward a look-out post in the mountain five hours away. Thorin insists that his hall under the mountain will be beautiful once it’s been cleaned and restored to its former glory. The group wonders where Smaug could be.
Thorin’s optimism in this scene indicates his greatest strengths and his greatest weaknesses. He’s loyal to his inheritance—the treasure itself—and this makes him an effective leader, guiding his twelve followers across the world. At the same time, Thorin’s overwhelming love for his home and his gold is a weakness, since it makes him selfish and uninterested in compromise of any kind – in these ways he actually resembles Gollum and Smaug.