Birth of the First Kobold

Here me, my fellows, as I speak of our greatest of foes, and worst of brothers. In times long past, when the Goblinlord’s jealousy first made him seek the blood of his betters, we Gnomes had a great city. The name of the city is lost to all time, but our memories of it say that it was a place of wonders, where illusion stood side by side with artifice. In the first city, Rocks and Tinkers lived as brothers, in a manner even closer than in modern times.
This great city had a council of three to over see it. The first was Snellos Rabbitfinder, a rock gnome illusionist of such power that he could trick rain to fall where it was needed. The second was Agganar Boltgrinder, the tinkering genius that invented such wonders as steam power and the screw. And the third was Kobols Candlekeeper, a wily gnome who oversaw the great salt mines, and as such had much wealth, for even then we gnomes treasured our salt.
When the time came that the Goblinlord began his war, the three met in council to discuss the problem of defense of the first city, for they knew they had not the military might to battle the goblins. Snellos spoke of great magics he could cast to give the gnomes the ability to conceal themselves from prying eyes, and Agganar spoke of great technologies that would carry the people over the sea, to places far from the reach of the greenskins. Kobols became jealous, for his mines gave him no way to aid in the defense of his people, as goblins do not love salt as we do and would not give in to bribes. In his mind he felt that the others would get all the glory, and all gnomes seek glory in some way. So that he would have his say, he spoke of the gnomes retreating into the salt mines and tunneling as the badgers do, to areas safer to the people. Kobols was rebuked by his fellows who told him that gnomes cannot live without the changing wind through our whiskers, and told him to make ready with the other ideas.
Kobols became angry at this, and allowed his vainglory to harden his heart. Rather than aiding in the preparations for the ships, he went to his supporters and wove a tale of betrayal and deception. Kobols told them that the council had chosen them for a suicide mission to delay the goblins while the other gnomes escaped in the tinkers ships. Led by this lies, Kobols followers hardened their hearts to their brothers, and retreated into the great mine, to follow Kobols’ idea. Because they feared the goblins following them, Kobols followers littered the mines with trick and traps, to guard their backs.
Soon came the time that the green army came to the first city, and because of the magics of Snellos all the gnomes were invisible and left for the harbor unseen, when they arrived Agganar told Snellos that the lodestones for the ships compasses were not delivered by Kobols (for gnomes never learned to chart their course by the stars like humans), and that none of his followers could be found. Fearing their fellow and his followers were trapped, Snellos and Agganar lead 100 of their followers each to find him, while sending all of the other gnomes off in the boats to safety. (Due to lack of compasses, these ships ran aground on some island, and are known as the lost fleet.)
When the Rock and Tinker Gnomes entered the mines looking for Kobols and his followers, they ran afoul of the traps that had been set, and began to hoot and yell in pain and anguish, for they knew they were betrayed. When the followers of Kobols heard this commotion they feared the goblins were behind them, and began to fight in the dark. As gnome killed gnome for this first time in history, Snellos laid a dreadful curse on Kobols followers. “Cowards, may you have your mines, lit forever by your candles, and may you forever wear the face of your cowardly betrayal!” and Snellos released his magics as he died on Kobols sword. In that moment all the followers of Kobols warped and twisted and grew into a rat-like form.
As they watched the rat-gnomes retreat, Agganar took up Snellos’ body and called the retreat from the mines. Upon reaching the surface, Agganar saw that the goblins had begun burning the first city, and had cut them off from the harbor. Agganar swore a oath of clan vengeance on Kobols and his followers and lead the other gnomes deeper into the heart of Lerias, hoping to find a way to hide from the Goblins. It is said that this oath is the reason that gnomish technology is flawed, the desire to claim this vengeance distracts the minds of all tinkers (all of whom descend from Agganar), and prevent the perfection of their devices until the last kobold is slain.
In the mine, Kobols found that the new form he and his followers had been given, could not stomach salt, and so all the wealth he had was worthless to him. In his jealousy and greed he poisoned the minds of his followers against the gnomes, leading to the eternal hatred between the two groups that lasts to this day.