As Patrick McGilligan relates in his biography Fritz Lang: The Nature of the Beast, expatriate producer Erich Pommer actually offered Lang two different properties when he arrived in Paris, the other being a detective story called A Man Stolen. Max Ophuls, who wound up directing the latter, thought that each man got stuck with the wrong movie—Ophuls, who would later create such bittersweet romances as Letter From an Unknown Woman (1948), La Ronde (1950), and The Earrings of Madame de... (1953), would have been more at home with Liliom, whereas Lang, whose sinister streak would continue with such Hollywood classics as Fury (1936), Ministry of Fear (1944), Scarlet Street (1945), and The Big Heat (1953), would have excelled at the mystery story.
But it may not have been so simple as that. Liliom was the tale of a selfish and violent carnival barker (played by Charles Boyer in the Lang version) who marries a sweet young woman, abuses her terribly, and, after committing suicide in the wake of a botched robbery attempt, arrives in heaven and is given one last chance to redeem himself. Lang was a great artist, but he was also a dreadful man—cold, cruel, and manipulative. Back in Germany, he'd been involved in a terrible scandal in 1920 when his first wife, Lisa Rosenthal, walked in on him and his mistress, Thea von Harbou (a screenwriter who would collaborate with Lang on many of his German films). According to Lang and von Harbou, Rosenthal then shot herself, but some of Lang's associates—notably the great cinematographer Karl Freund—suspected the adulterous couple of murder. Given this lurid tale, which was whispered about for the rest of Lang's life, one can imagine why Liliom would have struck a chord in him. Speaking to students at the American Film Institute in 1974, Lang remarked, "Liliom I always liked very much. Today I almost like Liliom best of all."
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That's interesting, I didn't know about the trade with Ophuls. For me the curious pairing with Liliom is Frank Borzage's 1930 version, which is more German Expressionist/Langian than Lang's, while Lang's has the tenderness of Borzage's great early 30s films (and in Boyer, the only Liliom who ever made any sense as a character we'd want to spend time with-- he's a lout and a brute, but you see where it comes from his own self-loathing, and if he was better to himself, he'd be better to her, too).
As far as Borzage goes, his best version of Liliom is Man's Castle-- really, practically the exact same movie, minus the heaven sequence and all that.
It wasn't a trade, strictly speaking: Lang was a world figure at that point, so he probably got his pick of the projects and Ophuls took the one that was left.