In October 1945 the German artist Kurt Schwitters, who had been living in Britain since 1940, wrote a fairytale about a man with a glass nose. At first the man's nose is covered with skin and looks much like a normal nose, but the skin gradually becomes thinner and eventually vanishes completely. What it reveals is quite the work of art: the nose "could reflect the most improbable lights and colours and allowed objects to shine through in fragments". Soon, everyone wants to have a glass nose. Unfortunately, such noses also have a downside: they allow you to smell people's true thoughts, and those who compliment him most smell the worst. Don't listen to people, seems to be the moral of the story. Or in the words of Schwitters's anti-Pinocchio to his flatterers: "You smell of cheese!"
Schwitters had had it with the London art scene, and with the English national character more generally. His letters to friends and relatives back in Germany are less coded than his creative output: "You always talk very quietly in England, at least the middle classes do. If you talk loudly you count as 'common', not a gentleman … The result is a typical English attitude. The English don't defend their ideas, because then they'd have to talk loudly."
A typical Schwitters collage can look like the result of an explosion in a printer's workshop: there are playing cards, sweet wrappers, torn bus tickets, magazine cuttings and rusty nails. The Skittle Picture from 1921 looks like someone has thrown a bowling ball through a toy shop window and glued the result on a canvas: a mess – at first sight. If you look more closely, you realise how carefully assembled the collage is, and how removing just the tiniest snippet would upset a delicate balance. Counterfeits of Schwitters collages have been sold at London fleamarkets since the 1950s (art historians have identified up to 700, and some of them are archived in the British Museum), but it's surprising how easy it is to tell the fakes from the real thing. With Schwitters, chaos had a method.
He worked in collage and paint, sculpture and performance, poetry and fairytales, and so identifying him with a single "school" of art is notoriously difficult. Schwitters is most commonly associated with Dada, though many Dadaists thought he was an oddball and a romantic ("the Caspar David Friedrich of the Dadaist revolution", the poet Richard Huelsenbeck said waspishly), but he was far too ironic to be a romantic, too abstract to be a surrealist and too anarchic to be a constructivist. Schwitters called his own art "Merz", which in itself is a random cut-off from the word "Kommerz". The apotheosis of Merz was a giant walk-in collage in his parents' home, filled with broken toys, glass bottles and pictures, which he called the Merzbau (the Merzbuild). If Schwitters was about anything, Merz summed it up: art that was not just about the proper, the polished and beautiful, but about offcuts, shards, broken bits, rubbish, the common detritus of life.
In Germany, this strategy had been a success. Not in the sense that Schwitters's art had made him a fortune, but in that he'd been able to earn a living as an artist. Though he steered clear of the avant-garde salons of Berlin, he kept in touch with Dutch, French, Russian and American artists by post. And in his provincial hometown of Hanover, there was a network of modern-minded collectors and gallerists who kept him busy with commissions. In the summer of 1920 a nonsense poem called "Anna Blume" ("Anne Blossoms") turned Schwitters into a local celebrity after his publisher pasted a poster with it all over town. And in Germany, Merz lives on: as recently as 1997 the German band Freundeskreis had a top-10 hit with a hip-hop track using "Anna Blume" as lyrics; and in Hanover, there is now a museum largely dedicated to his work, located on Kurt Schwitters Square.
The Merz Barn in Cumbria. None of the artworks inside the barn are original – they are other artists' interpretations of how they thought it might have developed had Schwitters lived longer. Photograph: Mark Pinder
In Britain, though, things didn't go so well. Schwitters had left Germany for Norway in 1937, after the Nazis had featured "Anna Blume" and two of his collages in their Degenerate Art exhibition. When Germany invaded Norway in April 1940, he moved on to Britain, but he was hardly welcomed with open arms: for the first four months, he was interned in Edinburgh, York and on the Isle of Man as an enemy alien.
After his release, Schwitters settled in Barnes, west London, but life remained hard. The London art establishment was not so much uninterested in modern German art as actively opposed to it. Raymond Unwin, the prominent architect, declared around this time that Germans "take up a theory readily, and follow it devotedly, so that at first glance they might be blind to limitations which we are quicker to catch a glimpse of". Where bad politics had sprouted, no good art could grow. Kenneth Clark, the then director of the National Gallery, had declared Germany "very much not my spiritual home" and condemned the influence of abstract art on British artists. He was too polite to say this to the artist's face, of course. "Why did the director of the National Gallery not even want to see me?", Schwitters scribbled in his notebook. "He does not know that I belong to the avant-garde in art. That is my tragedy."
Ineligible for public funding through the War Artists Scheme, Schwitters earned a living by taking on portrait commissions. When he did get the odd collage into an exhibition, it was ridiculed. A Daily Sketch report on a show at the Modern Art Gallery in 1944 has a man pulling a puzzled face next to a Schwitters sculpture: "Oo! Oo! The Oodle: An Adventure in 'Art'", the headline reads. When he organised a performance of his Ursonate poems ("Fümms bö wö tää zää Uu, / pögiff / kwii Ee") in 1944, two BBC representatives attended but left halfway through.
Yet he shares at least some of the blame. A period of rapprochement with the minority movement that was English modernism ended spectacularly when Schwitters fell out with Barbara Hepworth and Ben Nicholson, who called him "an ass and a bore". Schwitters, in turn, thought Nicholson unequal even to minor players in the Hanover arts scene and Hepworth a pale imitation of Hans Arp. He envied Henry Moore's box-office clout and respected the surrealist Julian Trevelyan, but overall, he wrote to his American patron Katherine Dreier: "The average English artist is good for nothing." The deepest level at which he was prepared to engage with British culture, it seemed, was to read Romeo and Juliet in the original.
In the autumn when Schwitters bundled all his frustration with the English way of life into "The Man with the Glass Nose", he had just managed to escape London, and he and his new English girlfriend Edith Thomas had settled in the picturesque town of Ambleside in the Lake District. Strangely, it is at this point that Schwitters's life took a fairytale turn. Impoverished and recovering from a stroke, he befriended the retired landscape gardener Harry Pierce, who loaned him a dilapidated shed on his idyllic plot of land nestled on the Langdale hillside. In the final months of his life, Schwitters worked happily on a new version of the Merzbau, the Merzbarn. On 8 January 1948, a day after learning he had been granted British citizenship, he died of acute pulmonary oedema.
"Thanks to England, we live in an idyll," he had written to a friend not long before, "and that suits me just fine. England in particular is idyllic, romantic, more so than any other country." The Dada rebel who had found London too quiet somehow found a new spiritual home in the land of Peter Rabbit and Mrs Tiggywinkle.
There's also something neat about Schwitters's homecoming. To understand why, you need to visit the Merzbarn in Elterwater, then hike up and down the next set of hills. In under 45 minutes, you end up at Dove Cottage, the former home of William Wordsworth. Wordsworth and Coleridge, it is worth remembering, became towering figures of English Romanticism only after a trip to Germany in 1789. Wordsworth didn't compose The Prelude in the Lakes – he had to travel all the way to the cold clammy Harz mountains to do so. And Goslar, the "old decaying city" in which Wordsworth wrote its first verses is only a short train journey from Schwitters's hometown of Hanover.
It's tempting to call this a closing circle, but perhaps a more appropriate image is that of a spiral of influences: a perfect metaphor for the constructive relationship between two countries that in spite of their similarities have always found it difficult to progress in sync. Schwitters and Wordsworth had to go abroad and be homesick in order to find out who they really were.
The original Merzbarn isn't part of the upcoming major retrospective at Tate Britain: the wall that he finished was discovered by Richard Hamilton in the 1960s and moved to the Hatton Gallery in Newcastle upon Tyne, where it remains. It was in any case unfinished and is rather underwhelming.
By concentrating on the smaller works that Schwitters continued to produce through his life, Schwitters in Britain makes a convincing case that England may have got under his skin much more than his diaries and letters let on. En Morn, a collage from 1947, is pure pop art long before Hamilton and Paolozzi turned it into a recognisable British style. A pretty blonde is at the centre, framed by a London bus ticket and a peppermint wrapper – the backdrop is a kitschy panorama from the label of a can of Golden Morn peaches. The idyll is ironically offset with the patriotic newspaper headline "These are the things we are fighting for" at the bottom.