Hobbits are peaceful people who prefer to work metal into agricultural tools - you seldom see one with a sword in his hands. The only exceptions to this are rare swords that are usually gifts or lucky finds.
The very act of Megor the Hobbit finding and Elfish chest containing a dagger was most unusual. He was renovating the foundations of his house when he fell into an underground cellar and it was there that he made his invaluable find.
This dagger proved to be extremely useful as Megor made his way towards the Large Sea where he spent the remaining years of his life.