On p. 27 of ‘On Book Design’, by Richard Hendel, it says:
In a legendary essay, ‘The Crystal Goblet’, Beatrice Warde wrote that book typography should be as plain as a crystal goblet. She assumed that anyone drinking from an excessively designed jeweled cup would pay more attention to the cup itself than to the wine therein. Extending the idea, she claimed that excessive design would be just as destracting in a book. Extravagant typography would intrude between the author and the reader.
Book designers who prefer doing timeless crystal-goblet typography know precisely what Beatrice Warde meant. They are on typographic good behavior and would prefer never to violate [Stanley] Morison’s ‘first principles of typography’. They would agree with the type designer Fred Goudy, who (it is alleged) said that anyone who would letterspace lowercase letters would steal sheep. These folks know the rules.
This is supposed to be the same Fred Goudy who designed a zillion eccentric typefaces, book faces among them.
The quotation is a bowdlerization distorted according to one or another person’s pet peeves. In fact lowercase is letterspaced all the time, particularly in narrow magazine columns, where it can become damn near unavoidable; you don’t have to be a typographer to notice this, just a reader. What actually is alleged to have happened is that Mr. Goudy was given an award, and on the award there was amply letterspaced, all-capitals blackletter. Upon receiving the award and looking at it, Mr. Goudy remarked, in front of everyone, that someone who would do such letterspacing probably would shag sheep.
I am guessing that the typeface was Goudy Text, and that somewhere in the history of the distortion ‘text’ meaning blackletter got converted to ‘text’ meaning running text.