Bree is a meeting place for the two very different worlds of the Shire and the rest of Middle-earth. Both Hobbits and Big People (humans) live there in relative peace, and there is always a steady stream of travelers of all kinds. Frodo, therefore, feels uneasy when the gatekeeper guarding the entrance to Bree takes a curious interest in the hobbits. The hobbits enter the Prancing Pony, the local inn, and announce themselves to the innkeeper, Barliman Butterbur. The hobbits seem to remind Butterbur of something, but he cannot quite place it.
The innkeeper sets the hobbits up in their room. After dinner, Frodo, Sam, and Pippin go into the main drinking hall while Merry rests in the room. The hobbits quickly become the center of attention in the hall, as the Bree folk rarely get news or travelers from Hobbiton anymore. Frodo worries about some suspicious-looking characters watching the hobbits from dark corners of the room.
Butterbur points out to Frodo a particularly weather-beaten individual called Strider. The innkeeper says that Strider is a Ranger, a wanderer among the northern lands. Strider makes some pointed comments, and Frodo begins to wonder how much the man knows. Frodo suddenly notices that Pippin, who has had too much beer, is telling the crowd about Bilbo’s birthday party—and getting very close to telling the part about the Ring.
To distract the audience from Pippin, Frodo gets up on a table and sings a rollicking song. His ruse works, but as he sings a second time, he falls off the table and accidentally slips the Ring on his finger. The crowd is shocked to see Frodo vanish, and everyone suddenly becomes quiet and suspicious. Frodo slips into the corner and reappears, where Strider, addressing Frodo by his real name and implying that he knows about the Ring, asks to see Frodo later. The people in the hall are not convinced when Frodo steps out of the corner and claims to have simply rolled over there as he fell. They all return to their rooms, and rumors fly.
All that is gold does not glitter,
Not all those who wander are lost. . .
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Strider follows the hobbits back to their room. He begins to talk, hinting that he knows much about their journey. The hobbits, especially Sam, are inclined to distrust Strider because of his vagabond appearance. However, Strider does indeed seem to know much about the Black Riders, who have recently been seen in Bree. In fact, he saw Black Riders speaking to the gatekeeper a few days ago. Strider also warns that others in Bree, including Bill Ferny—a “swarthy sneering fellow” who was in the drinking hall earlier—are not to be trusted.
Just then, Butterbur knocks and enters. He long-windedly explains to Frodo that he has a letter to Frodo from Gandalf. The letter was supposed to be delivered three months ago, but Butterbur forgot it, and only remembered it when Frodo showed up.