Kwaidan: Stories and Studies of Strange Things is a 1903 work in horror and folklore (and also, for some reason, Entomology) by one Patrick Lafcadio Hearn, known otherwise as Koizumi Yakumo, an International Writer born in what is now part of Greece, who wrote about, among a mass of other things, Japan, and Japanese culture. While he is often blamed by scholars for 'exoticisizing' Japan in the minds of people in the West, but his works present some of the first and decidedly some of the best forays into an erstwhile little known and understood folklore.
So why is this old book being referred to in a Touhou sub-forum? It is because this is the book that got me interested in Touhou, or rather, i am interested in Touhou because of this book. And i'm not the only one. All throughout Touhou's canon and characters, references to Kwaidan can be easily found. Be it simple terms like "Hourai" to archtypes for characters such as Letty Whiterock, or even the name of everyone's favourite 17 year old girl. Kwaidan is very clearly an influence on ZUN's works, in particular the early windows games and the Sealing Club.
On the whole, while i have not seen much enthusiam within the fandom for actual Japanese folklore, but i feel Kwaidan anyhow helps one understand and appreciate Touhou much better than what one would do without it, and it is also, i should point out, ZUNapproved™.
Kwaidan, ofcourse is no longer under any form of Copyright or anything of that sort.
You can read it legally at the cost of no money and some time at Project Gutenberg!.
So, free your schedule, and do share with us how you felt reading this. The reference hunt begins!