Eventually the ravens brought word that Dain was within two days march of the mountain. Roac declared Thorin's plan ill-conceived for even if victory in battle be won friendship would be lost. And the Dwarves had no supplies to survive the winter without the aid of the Men and Elves. Thorin was unmoved. Bilbo made up his mind that he must act. That night he quietly wrapped up the Arkenstone and went to the watch-wall at the Front Gate. He feigned to Bombur that he would take is watch and as soon as the dwarf left Bilbo dropped a rope over the edge and escaped the Lonely Mountain!
The hobbit estimated he had five hours before he needed to return. Slipping on his Ring he made it past the Elven sentinels but a sneeze gave him away so he appeared (to their great surprise) and asked to be taken directly to Bard. Quickly Bilbo found himself at a warm fire with Bard and Thranduil and both were quite curious as to what brought him there. Bilbo explained to them his contract with the dwarves and how by now he knew Thorin so well that he knew the dwarf would never consider the demands laid on him. He then casually mentioned the coming of Dain Ironfoot. Bard wondered if Bilbo meant to betray the dwarves or merely threaten them. "'My dear Bard!' squeaked Bilbo. 'Don't be so hasty! I never met such suspicious folk! I am merely trying to avoid trouble for all concerned. Now I will make you an offer! !'" (p. 283, The Hobbit, I think that extra exclamation point is a typo in my book).
Bilbo then revealed the Arkestone which awed even Thranduil. He gave it to Bard saying that Thorin would pay dearly (and thus allow a way for the repayment Bard had asked for) for it. Bilbo hoped this would diffuse the tense situation; but it was a bold act and big risk indeed in my opinion. Running short on time Bilbo excused himself to return to the dwarves. "The Elvenking looked at Bilbo with a new wonder. 'Bilbo Baggins!' he said. 'You are more worthy to wear the armour of elf-princes than many that have looked more comely in it. But I wonder if Thorin Oakenshield will see it so. I have more knowledge of dwarves in general than you perhaps. I advise you to remain with us, and here you shall be honored and thrice welcome.'" (p. 284, The Hobbit). He said this of course because Bilbo let Bard know that he was promised 1/14th of the treasure. Bilbo took his claim (the Arkenstone), and was essentially giving it to Bard so the people could receive the recompense for the destruction of Lake-town.
Bilbo felt he must return to his friends. But to his great surprise he ran into a friend as he left camp: Gandalf. The wizard was quite pleased with Bilbo's actions and encouraged him to keep his head up for the rough times about to come. "'You may come through alright. There is news brewing that even the ravens have not heard'" (p. 285, The Hobbit). This of course puzzled Bilbo as Gandalf has a habit of doing but he was delighted to see his old friend nonetheless. Back to the Front Gate he scrambled in enough time to wake Bombur who in turn awoke the next watchman.
Middle-earth timeline: Third Age, 2942 (winter)
Today's reading comes from: The Hobbit, pages 279-285
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