Dawn Walls-Thumma has an excellent essay up on her Tumblr blog. “Excellent” in this case means “gave me the answer to something I’d puzzled about for a long time, and also something to argue about”.
All through The Hobbit and The Lord of the Rings we get references to “the Wise”. We are told who they are, but what about them makes people think they’re so wise?  The wisest thing they do is sign on to Gandalf’s confessedly-foolish plan to win the War of the Ring.
Dawn, though, has put her finger on it. Northern Middle-earth has an oral culture. The upper classes can read, also some of the wealthier peasants like Butterbur, but as she shows, writing is ancillary to the spoken word. Elves don’t have a written culture at all. (Why would anyone write a history, when you could just go ask the guy who was there?) I’ve often thought this is why the Elves of Rivendell liked Bilbo so much: his offer to write down all their stories was a novelty to them, and they were as flattered as an old Appalachian who gets a visit from a Smithsonian researcher.
So, then, the Wise are those who are best at remembering stories verbatim, so the old knowledge base doesn’t get corrupted. The techniques for doing this are well known, even today when we no longer need them. (Can you imagine the size of Elrond’s memory palace?) You get a reputation for being Wise when the information you retrieve from the immense stores in your head is always correct, and you can act on it in confidence.
Incidentally, I think this exonerates Gandalf from Dawn’s charge that he’s not being square with Frodo when he says “If I were to tell you all that tale, we should still be sitting here when Spring had passed into Winter.” We’ve been spoiled by the random-access data storage all around us. Remembering used to be hard work, especially if the needed facts are stashed among thousands of years’ worth of memories. Extracting information from a memory palace isn’t fast. Gandalf would have to start at the front door and walk through all the corridors to get to the things Frodo wanted to know.  It’s not like opening a book to the right page. Which brings me to the thing I want to argue about.
Written-word vs. Oral-culture Infosec
There is little control of information in the oral tradition. It exists among the people, and anyone present to hear it can possess it. Written tradition, though, can be controlled and its audiences limited, creating authority in a way that doesn’t exist in the oral tradition.
I think this is backward. Oral cultures strictly control who gets to know what. There are initiation rituals, rites of passage, etc. that one must pass through before one is permitted to hear. Speakers can usually arrange to see everyone in earshot. But when authors write something down, they have no control over where the paper will end up.
Tolkien certainly uses the two media this way. Isildur didn’t tell people about the inscription on the Ring, he wrote it down “lest it fade beyond recall”. He had no idea who would need to know it, so he couldn’t have guessed whom to tell. (The obvious answer to the latter is Elrond, but that would have been an awkward conversation.) In the immediate context of “The Shadow of the Past”, Sam eavesdropped on the oral communications between Gandalf and Frodo, but was immediately busted. On the other hand, Merry got to read a page or two of Bilbo’s book with no one the wiser. Altogether, writing things down is much better for disseminating them than telling people.
 Apart from Celeborn, of course. He’s obviously wise. Shutting up and letting your wife do all the talking is the highest degree of sagacity, here at Idiosophy Labs.
 Note that when Gandalf is trying to remember the correct path in Moria, he sits there for six hours to make his decision. He can’t be collecting new information, so what’s he doing? He’s traversing his memory palace, over and over, looking for rooms he ought to have visited.