I awoke outside the Barrow, confused that I'm not dead.
Karliah stood over me as I recollected myself. Back in the barrow, she had an arrow of paralysis she intended for Mercer Frey - to capture him and bring him to justice (Justice, by a thief - imagine that). But seeing me near death, she shot it at me instead. The arrow slowed my heart and gave her enough time to drive Mercer Frey away and stop the poison.
Karliah then told me the truth about Mercer Frey - the three of them - Gallus, Karliah, and Mercer Frey, were indeed leaders of the Guild. But it was Mercer Frey that murdered Gallus in Snow Veil Barrow and left Karliah for dead. By the time Karliah recovered and headed back to the Guild, Mercer Frey had poisoned the Guild against her - and so she fled.
She never gave up on revenge, though - she left Skyrim to rebuild her resources until she is ready to confront Mercer Frey again. Staging the competition against Maven Black-Briar was just a way to bait Mercer Frey out. Karliah thinks that when he was alive, Gallus had suspected Mercer Frey of stealing from the Guild - it might even be the reason Mercer Frey chose to act first and kill Gallus.
But Gallus kept his thoughts in his journal, which are - unfortunately - encoded. Karelian says that an acquaintance in the College of Winterhold called Ethnir might be able to help.
Ah, Ethnir. Apparently this street-smart student of the College is also a contact for the Guild. Interesting. It’s time to pay him a visit at Winterhold.
I found Ethnir in The Frozen Hearth inn. The Altmer mage-in-training tells me that the script that Gallus used is not a cypher but an entirely different language: Falmer. A script, for the blind?
Sensing my disbelief, Ethnir explains that the Falmer were not always the sightless brutes that lurk in Dwemer ruins - they were once a distinct elven (Mer) race that populated the surface of Skyrim. But war with the Nords eventually drove them underground, seeking protection with their Dwemer brethren below. Something happened then, and their refugee status with the Dwemer turned them blind. Some suspect that the Dwemer poisoned the Falmer somehow... enslaving their Falmer cousins by turning them into sightless thralls.
But then the Dwemer disappeared suddenly, leaving their cavernous holdings to Falmer occupation - no one knows how many Falmer now live underground - but the prospect of them rising up to overthrow the Nords makes for a some sleepless nights...
Ethnir recalls that Gallus was always interested in things about the Falmer culture, and must have picked up knowledge of the script in his own way... the script is not well understood, and I will need the help of an expert to make sense of what Gallus wrote. Ethnir suggests that I visit Markarth, where the foremost mind on Falmer culture - the conjuror Calcelmo - resides.
Markarth is a hold at the extreme west end of Skyrim. Unlike other Nord holds, Markarth is actually carved into the rock face of the mountain. The settlement was once home to a group of humans unrelated to the Nords called the Foresworn - but the Nords had eventually settled and out-competed the natives. Being the racial chauvinists that they are, the Nords faced Foresworn rebellion from time to time - the most recent one being put down by a coalition of Nordic Jarls led by Ulfric Stormcloak himself. It was Ulfric’s claim to fame, and some say the beginning of the Stormcloak rebellion.
I found Calcelmo in the palace of Markrath. The mage is unwilling to help the Guild... so I have to resort to other means.
Sneaking into Calcelmo's laboratory was harder than one would expect - the mage had more mercenaries patrolling the place than the Jarl had men guarding his hold! I eventually found the transcription wall in the depths (well, heights, since this is Markarth and everything goes higher as much as deeper) of his laboratory and made off with a charcoal rubbing of it.
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