I agree with the two earlier messages praising George MacDonald. His fantasies and fairy tales got my attention as a child: I came for the Goblins, and stayed for the Great Grandmother. (the Curdie books)

Only in middle age did I come upon MacDonald's Lilith. It puts a lot of people off; and I will agree its flaws are substantial. But Lilith is one of those experiments which I value, not for the expectations it fulfills, but for the sense of possibility, of horizons and frontiers. George MacDonald's upbringing, by rights, ought to have kept him well away from the analyses of Carl Jung; and yet, after years of writing and publishing, he came up with Lilith and it is so Jungian as to stop one in one's tracks.   

Tolkien could, and did, lose patience with MacDonald, calling him a grandmother, and not as a compliment. Tolkien described Lilith as a failure, but an interesting one; and of its shadows and darkness, Tolkien remarked: "Death is the theme that most inspired George MacDonald." (from A Tolkien Miscellany)   Anyway, Tolkien allowed -- i cannot find the exact quote -- that MacDonald's goblins were a direct influence on The Hobbit.