A common nickname for the father of Samwise Gamgee, who was more properly called 'Hamfast'. He presumably acquired the name 'Gaffer' later in his life, because it implies a person of advanced years. This was certainly true of Hamfast, who was old enough to remember Bilbo's return from Erebor, and was no less than ninety-two years old when his son Sam left the Shire with Frodo.
'Gaffer' has another meaning, too, which is no doubt also relevant. In British slang, a 'gaffer' is a foreman, a person who supervises a job. At the time of Bilbo's Birthday Party, we're told that Hamfast, who was then seventy-five, oversaw the gardening at Bag End, but was helped by his son Sam. In that sense, then, Gaffer Gamgee actually was a 'gaffer'.
This is the logic of Gaffer Gamgee's name within Tolkien's universe, but in fact there was an original Gaffer Gamgee in the real world. This was a curious old man encountered by Tolkien and his family in Lamorna Cove in Cornwall, for whom Tolkien invented the humorous nickname 'Gaffer Gamgee'. From that came not only the 'Gaffer' of Gaffer Gamgee's name, but also the family name of all the Gamgees of the Shire.
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