He lived in Yogyakarta and then in Ubud, Bali starting from 1927, when Indonesia was under European colonial rule as the Dutch East Indies.

After the outbreak of war in Europe, Spies was arrested as a German national and interned by the Dutch authorities as an enemy alien.

Mexican artist and anthropologist Miguel Covarrubias lived and researched in Bali in the 1930s with his wife Rose, where they became friends with Spies.

Covarrubias wrote about his friend: "The months went by as Rose and I roamed all over the island with Spies, watching strange ceremonies, enjoying their music, listening to fantastic tales, camping in the wilds of West Bali or on the coral reefs of Sanur.

Walter loved to collect velvety dragonflies, strange spiders and sea-slugs, not in a naturalist's box, but in minutely accurate drawings.

"In his charming devil-may-care way, Spies was familiar with every phase of Balinese life and was the constant source of disinterested information to every archaeologist, anthropologist, musician or artist who has come to Bali.

Despite saying he wanted to escape from visitors, Spies still received guests at Iseh, including musician Colin McPhee and his wife, anthropologist Jane Belo, Swiss artist Theo Meier and Austrian novelist Vicki Baum.

[3] Under the shadow of rising fascism in Europe, in late 1938 "a witch-hunt was started against homosexuality", with newspapers launching "smear campaigns" against anyone suspected of such inclinations.

The colonial authorities decided to enforce the laws as strictly as possible and arrested more than a hundred suspects, leading to a "series of suicides, dismissals, broken marriages and ruined careers".