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This letter was written to Stanley Unwin of Allen & Unwin just after the first publication of The Hobbit. Tolkien was pleased that the book was being well received, though he suspected that the two glowing, unsigned reviews in The Times and the Times Literary Supplement were written by the same man. He noted with some surprise that no reviewer had picked him up on the use of the plural dwarves instead of dwarfs, and expressed regret that he did not manage to slip in the word dwarrow ("rather a nice word, but a bit too archaic").
Already there was talk about a sequel. Unwin had hinted that more stories featuring Hobbits will be looked for, but Tolkien felt he has little more to say about them: "Mr. Bilbo Baggins seems to have exhibited so fully both the Took and the Baggins side of their nature". Tolkien said that he has had a letter from one reader wanting to hear more about Gandalf and the Necromancer, but he rejected such a story as "too dark" – though at the same time he mused that "the presence (even if only on the borders)... [is] what gives this imagined world its verisimilitude". Nevertheless Tolkien was excited by the prospect of a sequel, hoping that it might allow him to "do what I much desire to do, and not fail of financial duty".
The book's reception on Tolkien's home turf was a mixture of amusement and guilty admiration.