Five days after their encounter with the trolls, the company finally arrived at RIvendell or "The Last Homely House". It was a secret valley accessed by a steep. slippery zig zagged path. The air became warmer, as they descended, and the smell of pine trees made Bilbo drowsy. Pine trees gave way to beech and oak trees and they were soon approached by the elves. It is in this chapter that we learn that dwarves don't get along with elves and that the dwarves think them foolish (which later gets them in to trouble).
The Master of Rivendell was Elrond. Elrond is described in The Hobbit as an "elf-friend". As Tolkien wove his history and stories of Middle Earth, Elrond was later known as "Half-elven" (a descendent of the union between Men and Elves). He was son of Eärendil and Elwing who were both half elven. The Half-Elven are not a distinct race but must choose to which race they belong - either to "Men" or to "Elves". Elrond was also descended from the Maiar (angelic beings), who granted he and his brother, Elros, the choice between an elven fate or human fate. Elrond chose the elven fate and immortality - his brother chose a human fate and mortality and became a King of Númenor. Elrond was approximately 6000 years old when he met Bilbo.
"The Master of the house was an elf-friend - one of those people whose fathers came into the strange stories before History, the wars of the evil goblins and the elves and the first men of the North. In those days of our tale there were still some people who had both elves and heroes of the North as their ancestors, and Elrond the master of the house was their chief.
He was noble and as fair in face as an elf-lord, as strong as a warrior, as wise as wizard, as venerable as a king of dwarves, and as kind as summer." (J.R.R. Tolkien: The Hobbit)
The company stayed at Rivendell for 14 days, until midsummer morning. Elrond knew about runes and before the company set our again, he looked at the swords they had found in the trolls' horde.
By reading the runes on the swords, Elrond discovers that they were made by the high elves of the west for Gondolin (a hidden city from the 1st Age) to be used in the goblin wars. Each sword was able to detect the presence of goblins by glowing blue. They also had the property of afflicting fear into the orcs. They were extremely sharp and were impervious to rust and corrosion
a) Thorin's sword - "Orcrist" or "goblin cleaver"
b) Gandalf's sword - "Glamdring" or Foehammer worn once by the King of Gondolin.
On looking at Thror's map, Elrond is able to discover that it contained moon letters which were rune letters that were only visible on the evening when there was a moon of the same shape and in the same season as the evening they were written. The runes on the map therefore were written on a midsummer's eve when a crescent moon shone behind them. They were written in silver pen using ithildin which was a derivative of Mithril and was used by the dwarves to decorate gateways, pathways and portals. The moon letters on Thror's map are written as follows: