There were certainly trolls, elves, and dragons. Most certainly elves, though a common misconception was that Tolkien's elves looked like the traditional fairy-tale elves which they most certainly did not. They weren't meant to leave inside trees, or have cute little pointed ears, or Robin-Hood-style hats.
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But to those creatures which in English I call misleadingly Elves
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There are numerous comments on the usage of dwarves, elves, etc. in
The Letters of J.R.R. Tolkien.
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Also I now deeply regret having used Elves, though this is a word in ancestry and original meaning suitable enough. But the disastrous debasement of this word, in which Shakespeare played an unforgiveable pan, has really overloaded it with regrettable tones, which are too much to overcome. I hope in the Appendices to Vol. III to be able to include a note 'On translation' in which the matter of equivalences and my uses may be made clearly. My difficulty has been that, since I have tried to present a kind of legendary and history of a 'forgotten epoch', all the specific terms were in a foreign language, and no precise equivalents exist in English.
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There are no songs or stories preserved about Elves or Dwarfs in ancient English, and little enough in any other Germanic language. Words, a few names, that is about all. I do not recall any Dwarf or Elf that plays an actual pan in any story save Andvari in the Norse versions of the Nibelung matter. There is no story attached to the name Eikinskjaldi, save the one that I invented for Thorin Oakenshield. As far as old English goes 'dwarf' (dweorg) is a mere gloss for nanus, or the name of convulsions and recurrent fevers; and 'elf we should suppose to be associated only with rheumatism, toothache and nightmares, if it were not for the occurrence of aelfsciene 'elven-fair' applied to Sarah and Judith!, and a few glosses such as dryades, wuduelfen. In all Old English poetry 'elves' (ylte) occurs once only, in Beowulf, associated with trolls, giants, and the Undead, as the accursed offspring of Cain. The gap between that and, say, Elrond or Galadriel is not bridged by learning
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<font size=1 color=339966>[ 4:21 PM December 28, 2003: Message edited by: Legolas ]