In the book the shire is being exploited and ravaged by a gang of hoodlums who answer to an old man named "Sharkey". Turns out that this is actually Saruman and after a brief rebellion Saruman is exiled but Wormtongue kills him for kicking him around once too often, then Wormtongue is shot by the hobbits as he tries to run away.

You really should read the books. As much as I loved the movies the books go into so much more detail.