Kaethe is Franz’s wife and is hard to like. Dick thinks that she’s a "cauliflower" when he meets her. And Nicole won’t let her kids play with Topsy and Lanier. Nicole is always flinching when Kaethe touches her. The narrator tells us that Nicole avoids Kaethe because she smells like pee! Apparently she doesn’t wash her drawers everyday and Nicole’s delicate nose perceives this. And, Kaethe thinks Nicole is just faking her illness for attention. Kaethe also accidentally tells Nicole that her father is dying before Dick has a chance to consult with Franz about whether she should be told.
What role does Kaethe have in the novel? We don’t know. Maybe Fitzgerald just wanted to write about a woman who smells like pee. Or maybe he’s trying to show another facet of Nicole’s personality – the mean, snobby aspect. How fun could it be for Kaethe? Not only is Nicole rich, beautiful and brilliant (and sweet smelling), but she finds Kaethe totally disgusting and won’t even let her kids play with Kaethe’s. No wonder Kaethe doesn’t like her.