This essay proposes an alternative account of the significance, for the development and interpretation of his work, of Henry James's engagement with French literature. Beginning with James's critique of the “cruelty” of the Goncourt brothers' novel Sœur Philomème, it argues, through a reading of The Turn of the Screw, that James's narrative technique and typical configuration of characters create a mechanism very different from the ethically sensitive portrayal of distinctive “perspectives” enshrined as the Jamesian contribution to a liberal Anglo-American aesthetics of the novel. The essay reviews the various critical efforts to reconcile James with his French near-contemporaries and suggests an outline of the evolution of his method and plots in the 1890s. An important figure in the dismantling and re-forging of Jamesian narrative “point of view” in this “middle period” — and especially in The Turn of the Screw — is the kind of female protagonist scrutinized by the Goncourts' novel. I argue that the structure of The Turn of the Screw — and the critical controversies that have beset its reception history — can be explained by linking it to the two failed texts that constituted James's bid for popularity (Guy Domville and The Other House) and to the nature of psychoanalytic allegory, as epitomized by E.T.A. Hoffmann's “Der Sandmann.” The essay offers a psychoanalytic interpretation rooted in the biographical and stylistic progression of the oeuvre to which the story belongs, one that accounts for its force and impact, and modifies key cultural and formal assumptions in the theory of fiction.