It was quite jarring to first hear “Wrap Your Troubles in Dreams.” Cale takes over on vocals for this one and provides the percussive tapping while Reed plays acoustic guitar. After hearing the preceding folk and blues-styled performances, suddenly it doesn’t sound like a reflection of any genre — it sounds like the Velvet Underground.
—Don Fleming & Jason Stern, liner notes to Lou Reed: Words & Music 1965

“Wrap Your Troubles in Dreams” is a title that Lou Reed flat-out stole from the standard written in the 1030s by Harry Barris, Ted Koehler, and Billy Moll. The original recording was by Bing Crosby:

But anyone who’s anyone cut a version at some point — Louis Armstrong, Tony Bennett, Dean Martin, Barbra Streisand, and Sarah Vaughn, just to name a few.

Lou’s song bears no resemblance, either musically or lyrically, to the previous one. And there is a 180-degree change in tone, from bouncy optimism to funereal bleakness. It may have been too bleak, even, for the Velvets, who never officially recorded it. (There is a demo, which is very similar to the 1965 Reed/Cale version.) “WYTiD” it would remain unheard by the world until it appeared on Nico’s album Chelsea Girl, where it was right at home.

Excrement filters through the brain
Hatred bends the spine
Filth covers the body pores
To be cleansed by dying time

Today I listened to Lou Reed: Words & Music 1965 in its entirety for the first time since I started writing about it, and Fleming and Stern are right: Nothing else — not even the versions of “I’m Waiting for the Man” and “Heroin” — sounds remotely like the VU. But we get to the last song and all of a sudden we’re in a different universe.

Here, finally, we hear the potential inherent in the combination of Reed’s literary sensibility and Cale’s classical/avant-garde background. In order to realize it, Lou would have to quit his job at Pickwick and John would have to break his ties with LaMonte Young. They would have to set out together, facing an uncertain future, believing they would find their way.

Cale sets the scene this way in his memoir What’s Welsh for Zen:

At the time, Lou was particularly depressed. Apart from being permanently numbed by Placidyl, he was bitter because Terry Phillips [sic] wouldn’t let him record his own songs, even though Pickwick churned out countless schlock pop albums. Lou had these songs and I was interested in getting a band going, so I said, “Fuck them, if they don’t want to do it, we’ll do it ourselves.”