That Peter Jackson cut his teeth on horror goes a long way towards explaining why Lord of the Rings: The Fellowship of the Ring is as good as it is. Its budget and production values are insane, its scope is stunning, and yet it’s animated by the joy this one-time B-movie director from New Zealand takes in being the one to direct the Lord of the Rings movie. He found Rings through the 1978 Ralph Bakshi adaptation, and you imagine Jackson working on his low-budget zombie flicks, thinking about how he could build on Bakshi and wishing he had the money and the freedom to do so. How excited he must have been to bag Christopher Lee, maven of mid-century horror, who brings icy authority and a touch of effeminacy to the corrupt wizard Saruman (watch how his robes swish as he stands atop his tower to summon down a storm on the titular Fellowship).

Another way Jackson’s horror chops shine is in the unpleasant streak that makes Fellowship so much scarier and more intense than most fantasy movies; the original Spider-Man trilogy, by Evil Dead director Sam Raimi, had a similar nastiness. The bug-eyed Orcs are truly loathsome, not least as they emerge from their fecal birthing sacks ready to kill. The violence isn’t about gore but trauma and physical impact. The opening battle is defined by bodies flying and falling rather than cutting each other down with swords. Arrows don’t just pierce bodies but knock the wind out of them. The good wizard Gandalf and the evil wizard Saruman do battle simply by flinging each other telekinetically against hard stone floors, bleeding on impact. And that’s not to mention what happens to the poor doorman in the town of Bree.

The movie’s most merciless sequence is the long stretch in the middle spent in the Mines of Moria. The Fellowship enters the mines relatively full of beans, and none of their troubles at that point had been much more than a hiccup. As they emerge on the other end, weeping and traumatized, the series loses its sense of innocent fun and takes on the pall of melancholy and hopelessness that would define The Two Towers and Return of the King. Moria sucks them in and spits them out, and its vastness and vertiginous heights stand in for the scope of Tolkien’s whole universe. In the books, Gandalf tells us of the depths of Moria: “The world is gnawed by nameless things.” You don’t need to be told that just by looking around Jackson’s version of the place.

That Jackson is so familiar and comfortable with this universe helps. He trusts the audience not to pause the movie and ask questions, and he understands that worldbuilding is 90 percent about what’s left unexplained. Everyone remembers Ian McKellen’s “you shall not pass” as he battles the satanic Balrog, but even more delightful is the arcane wizard-speak Jackson has McKellen incant just before. We don’t need to know what the Flame of Anor is. Only Gandalf seems to know, and he keeps his secrets. Gandalf is introduced as an imposing but kindly figure, with children running after his one-horse cart, but within his furrowed brow resides the weight of the world. He’s seen so many ages go by that he always has a learned hunch about exactly what’s happening in Middle-Earth at any given time. His misfortune is that he’s usually right.

With the exception of Sean Astin’s Samwise, who personifies conviction and a burning faith in good amid a screenplay filled with sighing pessimisms, the best acting is done by the older and more worldly characters who stand outside the Fellowship. Ian Holm as Bilbo is convincing as a retired adventurer, a formidable intellectual, a person losing his sense of self slowly over time—and, above all, as a jolly figure who still likes a pint and a smoke and a warm bed. The elves are benevolent but distrustful and dangerous; Hugo Weaving is stern and fatherly as Elrond, and Cate Blanchett as Galadriel need only look at the camera to convey the reserves of power her physical form can only barely contain.

The Fellowship is far less interesting: thinly-drawn characters who personify a few basic traits. The later films split them into factions, and though Sean Astin carries his scenes with Elijah Wood’s Frodo, the macho swashbuckling we see when the Aragorn, Legolas, and Gimli are on screen at the same time is absent here. Aragorn is far more interesting as the mysterious Strider than as the obligatory “chosen one” who will eventually unite the kingdoms of Men. Jackson makes him less confident in his kingship than in the books, ostensibly to develop an arc, but he’s so bland and his fate so written in stone that it’s hard to care much about him anyway. Gimli seems to have been assigned comic-relief duty based on height alone, and Legolas does little more than look wide-eyed at things and shoot arrows in critical places. As for poor Elijah Wood, he’s saddled with two expressions: traumatized and more traumatized.

That the Fellowship is all together at once here is part of why Fellowship is the best of the three films, winning out by a small margin over Return of the King. Another reason is that Jackson is still more interested in traditional filmic techniques than clogging the screen with CG. He digs through the annals of cinematic grammar for the best match for his material: the terrific dolly zoom, for instance, when a Ringwraith screams and Frodo and his companions dive off the road. Or the hair-raising careen down the side of Saruman’s tower into his disgusting subterranean furnaces, where the clink of hammers and the hiss of molten metal blend overwhelmingly with the shrieks and grunts of Saruman’s orcs.

This is one of the most artfully made blockbusters ever. Few would disagree but the nitpickiest Tolkien scholars and those averse to the mere idea of the Lord of the Rings universe, which was admittedly male-centric, racialist and centered on violence at the expense of the diplomacy of a gentler and more socially conscious author like Ursula K. Le Guin. Roger Ebert argued that “a true vision of Tolkien’s Middle-Earth it is not,” and indeed Tolkien was a little more fanciful, in love with poetry and sharing in the idealism of his hobbits. But the more you can appreciate how far Tolkien’s mythopoeia stretched and how he created his own language and myths and laws of physics to accompany his whimsical tales, the more you can feel that history in the very fabric of the film.

“If you’re referring to the incident with the dragon,” says Gandalf early in the movie, “I was barely involved.” That “incident” got made into a three-part series, so vastly inferior to the Rings movies and so blatantly compromised that they boil the blood to even think about. What’s brilliant about Fellowship is that it renders the Hobbit movie trilogy entirely superfluous. The incident with the dragon is right there in the movie, in the twinkle of McKellen’s eye—and in Jackson’s.

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