Encounter With Smaug

"Now you are in for it at last, Bilbo Baggins, you went and put your foot right in it that night of the party, and now you have got to pull it out and pay for it! Dear me, what a fool I am! I have absolutely no use for dragon-guarded treasures, and the whole lot could stay here for ever, if only I  could wake up and find this beastly tunnel was my own front hall at home!"

Upon entering the Lonely Mountain, and being sent alone by the dwarves to investigate for the dragon, Bilbo goes deep into the tunnels of the cave and finds Smaug, fast asleep and curled up in a great mound of treasure. Bilbo steals a golden cup, an act signifying that Bilbo has in fact become a bold and Tookish burglar, and he fleeds. After telling the dwarves about what he saw however, the dragon is heard in the distance and roars angered by the discovery of theft, and soon goes of and discovers the ponies and devours them.

Then as is the nature of folk that are thoroughly perplexed, they began to grumble at the hobbit, blaming him for what had at first pleased them: for bringing away a cup and stirring up Smaug's wrath so soon."What else is a burglar to do?"asked Bilbo angrily. "I was not engaged to kill dragons, that is warrior's work, but to steal treasure. I made the best beginning I could."

This shows the dwarves very selfish and unappreciative attitude towards Bilbo. At this point they had been rescued by him so often that they were starting to feel too comfortable with their adventure and take situations for granted, relying much concern, burden and reliability on Bilbo. Regardless this argument, he offers the dwarves that since he has his invisibility ring, he "will creep down this very noon - and see what (Smaug) is up to. Perhaps something will turn up."

" 'Every worm has it's weak spot,' as my father used to say, though I am sure it was not from personal experience."

And so Bilbo returns to Smaug's lair. He opens the door, peers in invisible, and sees that he is sleeping. Or rather, faking a slumber, because as soon as Bilbo steps in, the dragon catches his scent.

"Well, thief! I smell you and feel your air. I hear your breath. Come along! Help yourself again, there is plenty to spare!"

The dragon asks for Bilbo's name, but he only replies a series of riddle-like identities.

"I am the clue-finder, the web-cutter, the stinging fly. I was chosen for the lucky number. I am he that buries his friends alive and drowns them and draws them alive again from the water. I came from the end of a bag, but no bag went over me. I am the friend of bears and eagles. I am Ringwinner and Luckwearer; and I am Barrel-rider."

There conversation continues, and throughout it, Smaug confronts him about the dwarves wanting to steal his treasure. The beast begins to talk of the dwarves then.

"I suppose they are skulking outside, and your job is to do all the dangerous work and get what you can when I'm not looking - for them? And you will get a fair share? Don't you believe it! If you get off alive, you will be lucky."

The dragon even goes so as to tell Bilbo what mere method of transportation has been planned for his fourteenth share of the treasure. And all of this greatly influences Bilbo, and he begins then to doubt his friends. This represent the immense amount of corruption that evil always attempts to do on the innocent or guilty, it always tries to mold itself onto us to grant its own bidding to be done. 

That is the effect that dragon-talk has on the inexperienced. Bilbo of course ought to have been on his guard; but Smaug had rather an overwhelming personality.

After that Bilbo dismisses the talk and questions the dragon about any weak spots. To this Smaug doesn't leak any information, but when he rolls about, even Bilbo sees a patch of skin on his chest that is unprotected by any scales or armour. And pleased with the information he acquired, he flees from the cave.

"Never laugh at live dragons, Bilbo you fool!" he said to himself, and it became a favourite saying of his later, and passed into a proverb. "You aren't nearly through this adventure yet," he added, and that was pretty true as well.