On holiday in Millport as a boy, Chisholm had been given a copy of Patrick MacDonald's 1784 A Collection of Highland Vocal Airs. It was a seminal gift and he based many pieces of music on tunes from the collection, including all the Scottish Airs for Children, and the melodies for The Celtic Song Book. His much-annotated copy is kept in the University of Cape Town Archives.
His interest in Scottish music also included Piobaireachd, - the classical theme and variations of the bagpipes. Chisholm based the opening movement of his 1st Piano Concerto on a Piobaireachd called MacCrimmon's Sweetheart. The Mitchell Library holds the full manuscript score of this remarkable work, as well as a rare copy of the libretto for his opera The Isle of Youth.
In 1939, Erik's father bought him and Diana a house at 3 Carment Drive to accommodate their growing family, for they now had three daughters. This was the year of the founding of the Celtic Ballet Company, with Margaret Morris at its head. Chisholm was musical director and the first production was of his full-length ballet, The Forsaken Mermaid, performed on two pianos in 1940 with choreography by Margaret Morris and décor by Andrew Taylor Elder.
The piano score was published by the Dunedin Society, in preference to the songs of F.G. Scott, who described Chisholm as "a snake in the grass". But it was Chisholm who organised that F.G.'s entire archive be photostatted for the Mitchell Library. Not the work of a snake.
The Second World War brought Erik and Diana into hard times, Erik, himself rejected for call-up on medical grounds, had supported the artist William Crosbie's application as a conscientious objector. He was black-balled thereafter, apparently losing virtually all his teaching work, and he and his family retired to a farmhouse in Traquair.
Crosbie designed the sets and the costumes for Chisholm's ballet The Earth Shapers, based on Celtic mythology, and produced in 1941.