The Shire is an area of about 18,000 square miles in the fictional world of Middle-Earth (created by J.R.R. Tolkien), and located between Baranduin and the Far Downs. It is a very fertile part of Arnor, but was left empty in the course of the waning of the North kingdom. In TA 1601 it was given to the hobbits by King Argeleb II. By 1630 almost all of the Hobbits in Middle-Earth lived in the Shire. They divided the area in four farthings, North, South, East and West, and then they divided these into sub-divided into several folklands where different families and clans live.
The Hobbits lived there very peacefully, scarcely aware of the outside world and were very happy. The only times that they faced hardship as a people were the Great Plague of 1636, The Battle of Greenfields (2758), the fell winter of 2911 (when the Brandywine froze over and wargs invaded the Shire) and the time when Saruman dominated and nearly destroyed the Shire at the end of The War of the Ring. The great East road went straight through the Shire, but evil scarcely made its way into the Shire, largely due to the protection of the Rangers.
Because the population grew so big the Oldbucks crossed the Brandywine in 2340 and settled in Buckland. King Elessar (Aragorn) added the Buckland to the Shire and also gave the Hobbits the Westmarch, from the Far Downs to the Tower Hills. He also made the Shire a free land and forbade any men to enter that realm without his permission.
Most hobbits were farmers and most work the land, there were a few who did not have to work, but still occasionally did. There were a few hobbits who were very poor, but not that poor, and the others would usually look after them.
Bilbo Baggins, Frodo Baggins, Samwise Gamgee, Meriadoc Brandybuck and Peregrin Took all came from The Shire. It is where Bilbo with Thorin and Company began his adventure and where Frodo and the others set out for theirs. It was also called The Four Farthings.