Thanks to nuhad418…
This citation comes from a letter from Jung to John Symonds.
The quotation mentioned by Jung (given to him by Symonds) refers Charles Lamb “Witches and Other Night Fears” in The Essays of Elia (1821). The letter is dated 13 October, 1953 and can be found in C.G. Jung Letters, Vol.2, p.131. I sometimes wonder if Symond’s books have done more harm than good in the long run. Meh.
“The quotation you have kindly sent me is indeed very interesting. Thank you very much for it. I know a case in my own experience where children who have been brought up in a too rationalistic way, have invented fairy tales all by themselves, obviously to fill the gap left by the stupid prejudices of the adults.
I know the book about The Great Beast. It is indeed beastly beyond words, and very good reading for people who have too optimistic a view of man. Thank you, Yours sincerely, C.G. Jung”