I took the time to search for it, now you do not.
Lovecraft dropped some fantastic nuggets of advice in his letters but, finding those nuggets with just the help of Google isn’t much fun. Then you have to decide if you are going to look into the fantastic series from Hippocampus Press or the much older Arkham House Selected Letters series of five books (and hope the quote was actually in there).
In this case, I was looking for the quote about crafting your story as a kind of hoax.
This appears on Page 192-194 in Selected Letters III (1929-1931). This is a ‘selection of a selection’ in that it isn’t the entire letter to Clark Ashton Smith but the section of the letter that includes the reference. I make no claim of perfect accuracy as it is a result of OCR and a bit of modest hand editing and the highlight.
430. TO CLARK ASHTON SMITH
Temple of Azathoth,
That which gibbers mindlessly in Darkness at the Centre of Ultimate Chaos.
Hour of the Thin Piping of the Daemon Flutes, in the year of N’gah.
Oct. 17, 1930
Dear Klarkash-Ton:—
I am glad that The White Ship does not seem too badly waterlogged & unseaworthy after all these years. To me it has an undeniable touch of the artificial & the namby-pamby—for the style is one requiring more restraint & adroitness than I had eleven years ago. I did a whole young novel—1IO closely written pages—in that style during the winter of 1926-7, & fancy that that may have been my swan-song as a Dunsanoid fantaisiste. I like to spin that kind of cob-web—letting my imagination build cosmic Odysseys without restraint but as soon as they are done they begin to look a bit puerile to me. They need the glamorous perspective of the creative process to conceal their flimsiness & enhance their vitality. I have never had the fortitude to type that final piece of Plunkettism. Wandrei read it in manuscript & didn’t think much of it. Enclosed is The Hound, as requested, although I consider this one of the poorest jumbles I have ever produced. It was written in 1922, before I had begun to prune down the verbal extravagances of my earlier prose. There is too much sonorous rhetoric & stock imagery, & not enough substance, in this piece of junk. Meanwhile I shall be grateful for your opinion of The Whisperer in Darkness. This represents my most recent manner, although it is not an especially shining example of it. The more I consider weird fiction, the more am I convinced that a solidly realistic framework is needed in order to build up a preparation for the unreal element. The one supreme defect of cheap weird fiction is an absurd taking-for-granted of fantastic prodigies, & a sketchy delineation of such things before any background of convincingness is laid down. When a story fails to emphasise, by contrast with reality, the utter strangeness & abnormality of the wonders it depicts, it likewise fails to make those wonders seem like anything more than aimless puerility.
Only normal things can be convincingly related in a casual way. Whatever an abnormal thing may be, its foremost quality must always be that of abnormality itself ; so that in delincating it one must put prime stress on its departure from the natural order, & see that the characters of the narrative react to it with adequate emotions. My own rule is that no weird story can truly produce terror unless it is devised with all the care & verisimilitude of an actual hoax. The author must forget all about “short story technique”, & build up a stark, simple account, full of homely corroborative details, just as if he were actually trying to “put across” a deception in real life—a deception clever enough to make adults believe it. My own attitude in writing is always that of the hoax- weaver. One part of my mind tries to concoct something realistic & coherent enough to fool the rest of my mind & make me swallow the marvel as the late Camille Flammarion used to swallow the ghost & revenant yarns unloaded on him by fakers & neurotics. For the time being I try to forget formal literature, & simply devise a lie as carefully as a crooked witness prepares a line of testimony with cross-examining lawyers in his mind. I take the place of the lawyers now & then—finding false spots in the original testimony, & thereupon rearranging details & motivations with a greater care for probability. Not that I succeed especially well, but that I think I have the basic method calculated to give maximum results if expertly used. This ideal became a conscious one with me about the “Cthulhu” period, & is perhaps best exemplified in The Colour Out of Space. Its general principle would not have to be suspended even in dream-like narrations of the Randolph Carter & Erich Zann type—a type to which I may return now & then in future— though it does of course vanish in phantasy of the Dunsanian or White Ship order. I think I mentioned in a P. S. that Wright has just accepted The Whisperer for $350.00, to use as a 2-part serial in the June & July issues. This quick landing certainly pleases me mightily, & encourages me to cut down revision long enough to grind out a whole series of tales as I used to do in 1919 &1920. Of such a batch, only about 14 would be likely to land—yet the price of original work is so much higher than that of revision, that I might even at worst make as much as revision now brings. At any rate, an attempt will do no harm. I agree that very short pieces seem to lack effect—indeed, I seem less & less able to find anything which will go into a compact space. Every tale I tackle nowadays seems to spin itself out beyond all ordinary short story limits, nor can I find any way to make excisions without ruining the whole thing. I think a novel must be much easier to write than a good short story.
Selected Letters III (1929-1931). By H.P. Lovecraft, Edited by August Derleth and Donald Wandrei. Sauk City, WI: Arkham House Publishers, Inc.; 1998; Hardcover.