This section is from the book "The Principles Of Interior Decoration", by Bernard C. Jakway. Also available from Amazon: The Principles of Interior Decoration.
To diminish the apparent size of a room which seems too large these processes will be reversed. Darker and less neutral tones of the warm colors can be used on the floors and walls; larger and more pronounced pattern on the background surfaces; larger and more bulky furniture and accessories; and, provided always that its essential unity be not imperiled, the variety of the treatment can be increased in hue, tone, line and form.
The important decorative elements of the room must be chosen to accord with the proportions of the room. That is, they must seem to the mind to be like the room, either in physical appearance or in emotional significance. For this reason as a general rule of practice the scale of all forms - rugs, furniture, pictures, lamps, vases, textile patterns, and so forth - will be increased directly with the size of the room. Thus a large room will normally look better with a large rug than with several small rugs because of like significance, since the large room necessarily affects the mind with a sense of heaviness, immobility and permanence, while small rugs necessarily affect it with a sense of lightness, mobility and transience. Moreover, the mind is better pleased with the large rug because of its easily perceptible physical resemblance to the floor; and this sense of pleasure increases, as in the light of our fundamental principle of putting like with like we would expect, directly with the degree of likeness in size and in shape, up to the point where these likenesses are easily but not too easily recognizable. For example, in a room fifteen by twenty feet, whose width is to its length as three is to four, the mind would demand an oblong rug, and its pleasure in such a rug, other things being equal, would increase as the proportions of the rug approached the ratio of three to four. It would not, however, accept a small rug of these proportions, as 6' x 8', 7'6" x 10', or even 9' x 12', because the edges of such a rug would lie so far from the edges of the room that the likeness in proportion could be perceived only as the result of mental effort, which is always inimical to esthetic pleasure. On the other hand, a rug I4'3" x 19' would be too nearly identical with the floor to interest the mind, which would prefer a resemblance easily recognizable but of some subtlety, such as would be afforded, let us say, by a rug 11 '3" x 15'.
It is most important to note that where small rugs are used, the floor itself, and not the rugs, serves as the base of the decorative treatment, and the small rugs serve merely as ornament on that base. In this situation the floor must be toned to a depth which seems to the mind heavy enough to support the room, while the small rugs must, like all good ornament, be related to the structure by definite and easily perceptible relationships. Not only must their coloring and design harmonize with the other things in the room; their structural lines must conform to the structural lines of the room itself. That is, they must be so placed that their primary axis parallels either the primary or secondary axis of the room. To place a rug obliquely on a floor is in effect the same thing as to hang a picture or to carve the ornament of a chair back obliquely.
The same thing is true of the arrangement of furniture, in direct proportion to the size, bulk and structural emphasis of the individual pieces. While the subject will be discussed in the chapter on balance, it may be noted here that almost invariably the important units in a room - piano, reading table, davenport, bed, dresser, and so forth - must be made to parallel one or the other of the walls, no matter how far away from that wall they may actually stand. The idea that a room can be freed from an effect of stiffness or over-formality and invested with a quality of lightness and personal charm by placing heavy pieces of furniture askew in it is as erroneous as it is widespread.
In the choice of furniture, lamps and pictures the decorator will be guided by the general requirement for congruity in scale. Of course this is not to be interpreted as meaning that every piece of furniture and every textile pattern must be big in a big room, or small in a small room; it means simply that the principal pieces, the really significant objects that together constitute its organic structure, must be of a shape and bulk that is consonant with the shape and size as well as with the purpose of the room, as the thigh or torso of the athlete must be proportioned not only to his height, but also to the requirements of the game in which he is trained to compete. This analogy makes it easy to understand that even in the case of two rooms of the same floor plan a difference in the character of the rooms will necessitate differences in the proportions of many of the decorative units and in their relation to the whole, since it is only through the proportions of its parts that the true character of any whole can be constituted and revealed. Thus in the degree that a drawing room is to express the ideas of animation and gayety, as opposed to those of tranquillity and sobriety, it must be filled with relatively small and light pieces of furniture and decorative objects, even when the room itself is large. In this situation the decorator must depend for the effect of size and bulk necessary to accord harmoniously with the size of the room upon careful grouping. Two light chairs and a small table, for example, grouped for conversation or tea, affect the mind as one rather than as three units, and therefore satisfy the esthetic requirements of consonance, while the small size of the individual pieces accords with the function and decorative motive of the room. The mere fact of grouping will satisfy the esthetic requirements; the constitution, placement and arrangement of the various groups must of course be determined in practice by such considerations of suitability as the purpose of the room, the location of fireplace, windows, doors and lighting outlets, and the tastes of the people who use the room.

Figure 27. - This cut is redrawn from a so-called model living room for a flat. Four among the five pieces of furniture are placed obliquely. Note also the stiffness and total lack of interest due to the use of three large matched pieces in a small room.
 
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