<P> By 1915 when Tolkien was writing his first elven poems, the words elf, fairy and gnome had many divergent and contradictory associations . Tolkien had been gently warned against using the term' fairy', which John Garth supposes may have been due to the word becoming increasingly used to indicate homosexuality, although despite this warning Tolkien continued to use it . </P> <P> By the late 19th century, the term' fairy' had been taken up as a utopian theme, and was used to critique social and religious values, a tradition which Tolkien along with T.H. White are seen to continue . One of the last of the Victorian Fairy - paintings, The Piper of Dreams by Estella Canziani, sold 250,000 copies and was well known within the trenches of World War I where Tolkien saw active service . Illustrated posters of Robert Louis Stevenson's poem Land of Nod had been sent out by a philanthropist to brighten servicemen's quarters, and Faery was used in other contexts as an image of "Old England" to inspire patriotism . </P> <P> According to Marjorie Burns, Tolkien eventually chose the term elf over fairy, but still retained some doubts . In his 1939 essay On Fairy - Stories, Tolkien wrote that "English words such as elf have long been influenced by French (from which fay and faërie, fairy are derived); but in later times, through their use in translation, fairy and elf have acquired much of the atmosphere of German, Scandinavian, and Celtic tales, and many characteristics of the huldu - fólk, the daoine - sithe, and the tylwyth - teg ." </P> <P> Traditional Victorian dancing fairies and elves appear in much of Tolkien's early poetry, and have influence upon his later works in part due to the influence of a production of J.M. Barrie's Peter Pan in Birmingham in 1910 and his familiarity with the work of Catholic mystic poet, Francis Thompson which Tolkien had acquired in 1914 . </P>

Where do the elves live in the hobbit