After leaving Rivendell, the company ventures into the Misty Mountains. A storm comes a few days into the journey and Kili and Fili are sent to find shelter. They find a cave and claim to have checked it thoroughly. While in the cave, Gandalf amuses the dwarves and hobbit with smoke rings and then they all fall asleep, except Bilbo. He cannot sleep and when he does finally fall asleep, he has horrible dreams.

"It was the last night they used the ponies, packages, baggages, tools and paraphernalia they had brought with them. It turned out a good thing, that night, that they had brought little Bilbo with them after all. For somehow,he could not go to sleep for a long while, and when he did sleep, he had very nasty dreams. He dreamed that crack at the wall of the back of the cave got bigger and bigger and opened wider and wider and he was very afraid but could not call out or do anything but lie and look. then he dreamed that the floor of the cave was giving way and he was slipping beginning to fall down, down, goodness knows where to! At that he woke up with a horrible start and found that part of his dream was true! A crack had opened at the back of the cave and was already a wide passage. He was just in time to see the last of the ponies tails disappearing into it. of course he gave a very loud yell, as loud a yell a hobbit can give, which is surprising for their size. Out jumped the goblins!"

In the chaos, and in a flash, the Goblins carry off the dwarves and Bilbo, but Bilbo's scream alerted Gandalf and he escaped, which allowed him to later free the others from the Goblins.

So, Bilbo served a great purpose, because without his dream and scream, they all would have been captured and the journey would have ended. Who knows who would have ended up with the Ring and how Middle-earth would have faired?

This event also marks the second capture of the company by the enemy. The capture is a result of dwarf mistakes. The capture leads the company deep under the mountains, which essentially leads Bilbo to the Ring, which would not have happened otherwise, thus affecting the future of all Middle-earth.