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A question for you Loremasters out there, since the books thus far (and as I recall, 1st edition didn't either) haven't addressed a question I've occasionally pondered.

We know Bree is fairly rustic, they know of hobbits and aren't actively prejudiced towards people from the South or dwarves etc, but how should the common people react to Elves in Fellowships walking into the Prancing Pony and having a mug of the local beer? We already know that Elves are supposed to be rare (most hobbits hadn't ever seen one) but they're common among player characters at least.

My current game has a High Elf out of Rivendell who's set up base in the Prancing Pony: they've got the Artificer of Eregion background, and they're essentially looking for artifacts and relics to study, as in my game, the market at Bree often has some sketchy out-of-town traders selling their wares and occasionally there's something weird like an ancient trinket that's likely to have come out of a Numenorian tomb or the like. So far the question hasn't really come up, as they spend most of their time out in the wild, but I'd like to hear the forum's input on this.

Elf-sightings might not be as rare as you think, at least on the fringes of settled lands. Most folks might just be reluctant to talk about them. At other times, the Elves might be mistaken for Men, especially if they're disguised (perhaps in the company of one or more Rangers).

At The Sign of the Prancing Pony describes Bree as "friendly and familiar" with Elves.

"The Men of Bree were brown-haired, broad, and rather short, cheerful and independent: they belonged to nobody but themselves; but they were more friendly and familiar with Hobbits, Dwarves, Elves, and other inhabitants of the world about them than was (or is) usual with Big People." (my emphasis)

Bree's wariness/unfriendliness is applied to Rangers:

"When they [Rangers] appeared they brought news from afar, and told strange forgotten tales which were eagerly listened to; but the Bree-folk did not make friends of them."

All the peoples of Middle Earth tend to be parochial and insular but there are a ouple textual references to elves passing through Bree. A good place to shake the dust off and have a mug of ale on your way to Valinor