Edith Wharton, by Hermione Lee

Edith Wharton wrote about the grand families of old New York, but as Mark Bostridge discovers, behind the chilly exterior the 'American Duchess' was passionate, erotic and transgressive

Edith Wharton once compared a woman's life to "a great house full of rooms". This is a tempting framework for any biographer, and one that Wharton's latest, Hermione Lee, uses to striking effect in her massive new book about the American writer, famous for portraying Old New York's "Gilded Age".

In a literal sense, the notion of a life as a house, or in this case, a series of mansions and chateaux, is particularly appropriate to Edith Wharton. She was passionate about house and garden design, and published her first book on the subject. She decorated two homes in Newport, Rhode Island, following her ill-fated marriage at 23 to the charming but mentally unstable Teddy Wharton, before moving to the residence that her friend Henry James described as "a delicate French chateau mirrored in a Massachusetts pond", The Mount, built on a hillside in Lenox. In later life, as an American in France, her adoptive country, Edith Wharton lived in the smartest district of Paris, and then, after the First World War, remodelled two other houses, one on the French Riviera, the other at Saint-Brice in the Paris suburbs.

The restlessness with which she undertook these renovations was a product of Wharton's furious energy, which so scared her motoring companion Henry James, and led him to nickname her the "Angel of Devastation"; it also reflected her lifelong feeling of being an outsider. As Hermione Lee suggests, the essential tension in Edith Wharton's work stems from her being held in a world in which she remains ever the watchful stranger. This is as true of her non-fiction writing about France in the Great War, for instance, when she became "the great generalissima", dedicating herself heroically to the struggle for "la patrie", as it is about her novels dissecting upper-class moneyed America.

But Wharton also appreciated the idea of a house full of rooms as a metaphor for what lay mysterious and unexposed to the outside world about her own life. In a short story, published more than a decade before she struck success in 1905 with The House of Mirth, her first bestseller, she described an "innermost room, the holy of holies" in which "the soul sits alone and waits for a footstep that never comes". Unlike Wharton's philistine husband who, in this figurative scheme, never got beyond the family sitting-room and - what is worse - "was quite content to remain there", Lee the biographer pursues her subject down every winding corridor, into every hidden passage and dark corner. Her book is a feat of exhaustive research, and finely tuned to Wharton's creative achievement at the same time. Its major emphasis is no longer on the grande dame, known to contemporaries as "our literary aristocrat" or, in the words of a former disciple Percy Lubbock, as a "polished American Duchess", but on the woman who felt she hadn't been loved enough; the Edith Wharton who had an intense mid-life affair and confided her feelings about it to a secret journal, whose writing about sex is often questioning and erotically charged, and whose most shocking act, perhaps, was to draft the beginnings of a story about a father making love to his willing daughter, described in the most graphic terms.

The time is ripe for a new biography of Edith Wharton of this intimacy and on this scale. When, in the late 1960s, the embargo was finally lifted on the 400 kilos of Wharton papers sold to the Beinecke Library at Yale, the man chosen to write the first authoritative biography of Edith Wharton, R W B Lewis, wondered out loud whether her literary reputation might not have stood higher had she been a man. In the States, sales of Wharton's books had been flagging in the decades since her death in 1937, while in Britain, she was regarded as a novelist of the second rank, indeed, as a poor man's Henry James. (Lee is intent on removing this slur by revealing the many differences between the two writers, as many as the similarities, and by showing that sometimes Wharton influenced the Master, as much as the other way round.)

This neglect began to disappear with the publication of Lewis's biography, and by the 1990s there existed an enormous academic industry centred on Wharton. But the real boom came when Hollywood scented Wharton's potential for movies. Back in the 1930s, Bette Davis had starred in a three-hanky adaptation of Wharton's novella The Old Maid, but as the end of the century approached, one Wharton film succeeded another: Ethan Frome, The Buccaneers (from BBC TV), The House of Mirth (brought to the screen by British director, Terence Davies) and, to cap them all, a lush Martin Scorsese production of The Age of Innocence, with Daniel Day-Lewis as Newland Archer and Michelle Pfeiffer as the exotic Countess Olenska.

But this surge of interest has had its negative side. Wharton is now widely perceived as a symbol for wealth, status, and for all the values associated with the exclusive society of the New York Four Hundred (testimony that this kind of perception lingers on was recently provided by a magazine advertisement for an 18-carat gold and diamond watch, worn by Angelina Jolie, and called "The Wharton").

Edith Wharton was undoubtedly born into this world, in 1862, in the middle of the Civil War, and grew up inside a highly regulated social system, engaged in fighting off the claims of new money. But she turned a critical and satirical eye on it - and spent more of her life in Europe than America, as soon as she could manage to do so. Wharton's most famous novel, The Age of Innocence, published in 1921, set in the New York of her upbringing, in the 1870s, expresses a sense of alienation from the United States, seen from a European vantage point. It may possess a nostalgic glow in its mourning over a vanished world; but, as Lee points out, there is also an implied attack on "the hypocrisy, philistinism and resentful narrow-mindedness of her parents' generation". In any case, to associate Edith Wharton too rigorously with this milieu is to ignore the obvious fact that her empathy stretched much further, to the portrayal of the American rural working class in works like Ethan Frome and Summer, and the problems of industrialisation in The Fruit of the Tree.

Lee says that Wharton was clearly "a material girl", but describes her version of the woman as "less genteel and more modern". Born in 1948, and currently Goldsmiths' Professor of English at Oxford, Lee has been working on her life of Wharton, her first major book since the internationally acclaimed Virginia Woolf, for the past seven years. She believes that Wharton's novels are "quite an adult taste", and admits that she wasn't really drawn to them herself until her twenties. What she finds remarkable about them now is their combination of a cold, ironic tone with their passionate entry into human emotion: "She's very cool and very hot." Lee is one of those rare academics who don't condescend to biography as a subject worthy of critical discussion. In fact, one of Lee's innovations at Oxford has been to introduce a course in life writing which revolves around lectures each year by biographers talking about their work; and one of her future projects will be a discussion of the form in OUP's "Very Short Introductions" series.

As a biographer, Lee is, like her subject, both hot and cold. Her critical exploration of Edith Wharton's work is dazzlingly assured, and she is unafraid of interrupting the narrative, for pages at a time, in order to coax themes and connections from the 40-odd titles that Wharton published in her lifetime. She considers, for example, the ways in which Wharton intersects with Proust. Although they never met, Wharton responded to Proust's theme, in A la recherche, of obsessive love, and recognised his depiction of Faubourg society, where she resided intermittently between 1906 and 1920. Lee's portrayal of Wharton's own obsessive romance, in 1908-9, with Morton Fullerton, a "frightful bounder" and international Don Juan, and, for a while, Paris correspondent of The Times, is just what it should be: completely involving, uplifting at one moment and suffocatingly intense, devastatingly painful, at the next. There was, Lee confesses, almost sorrowfully, something about Fullerton, despite his caddish qualities, that made women want to give themselves completely to him. Wharton wrote that she had had no personal life before Fullerton. "I have been too sad, for too long, and something in my nature... has left me starving for what other women seem at least once in their life to know."

Lee's book might well have disappointed Edith Wharton on one count: its excessive length. She would have thought it, in the architectural terms in which she often spoke about her novels, too "loosely built". But she could scarcely have failed to be impressed by its other qualities, its artistic sympathy, its sonorous depths, and its soaring conception. This is a glorious biography.