The scene changes to Nibelheim, the subterranean home of the Nibelungs. Wotan and Loge find Mime, Alberich's brother, bewailing the fate of the Nibelungs—for Alberich has fashioned the Ring and all below groan under his tyranny. Even now, reluctantly indeed, Mime is forging the Tarnhelm for his tyrant brother,—a wishing-cap by whose magic the wearer may transfer himself through space and assume whatever form he please, or make himself invisible, at will. Alberich, in the flush of power, enters, driving before him with brandished whip a host of Nibelungs from the caverns. They are laden with gold and silver handiwork. At Alberich's command they heap it in a pile. He draws the Ring from his finger; the vanquished host trembles and, shrieking, cowers away.
"What seek ye here?" demands he, looking long and suspiciously at Wotan and Loge.
They have heard strange tidings, says Wotan, and they come to see the wonders that Alberich can work. Then Loge induces the Nibelung lord to exhibit the virtues of the Tarnhelm. Readily beguiled, he displays his necromantic power. First he transforms himself into a loathly dragon. The gods pretend dismay:—he can make himself great; can he make himself small, likewise? "Pah, nothing simpler! Look at me now!" He dons the Tarnhelm, and lo, a toad!
"There, grasp quickly," says Loge. Wotan places his foot on the toad, and Loge seizes the Tarnhelm. Alberich becomes visible in his own form, writhing under Wotan's foot. The gods bind him and drag him to the chasm by which they had descended.
The scene changes to the open space before Valhalla. Alberich, dragged in by Loge, is forced to deliver up the hoard and the Tarnhelm and the Ring. Wotan contemplates the Ring and puts it on. Alberich is set at liberty.
"Am I now free?" cries he, "free in sooth? Thus greets you then my freedom's foremost word: As by curse it came to me, accursed forever be this Ring! As its gold gave measureless might, let now its magic deal death to its lord. Its wealth shall yield pleasure to none. Care shall consume him who doth hold it. All shall lust after its delights; yet naught shall it boot him who wins the prize! To its lord no gain let it bring; and forever be murder drawn in its wake, till again once more in my hand, rewon, I hold it!"
So the baffled Nibelung curses, and departs. Then enter Fricka, Donner, and Froh, followed soon by the giants, who bring Freia back. They refuse, Fasolt and Fafner, to release the fair goddess until she is fully redeemed; and they claim not only Tarnhelm and gold, but Ring as well. With the Ring Wotan refuses to part. In that moment rises from a rocky cleft the goddess of the earth, Erda, the beloved of heaven's god, and mother by him of the Valkyries.
"Yield it, Wotan, yield it," she cries warningly. "Flee the Ring's dread curse."
"What woman warneth me thus?"