Ahh, William Morris. I took a "Precursors to Tolkien" class last year and William Morris was one of the writers we focused on.
From what I learned in the class, Tolkien definitely read some of Morris' stories. I have a whole list
Some stories I read in the class by William Morris:
The Wood Beyond the World (Really dreamy and picturesque)
Well at the World's End (Same as above)
News from Nowhere (bleh. Didn't like it that much)
The Haystack in the Floods (a grim and dreary short poem)
Apology for the Earthly Paradise (Bleh again; not much to like in this poem)
I'll write a more detailed description of each when I get some time later tonight.
I also have copies of:
House of the Wolfings
Land of the Glittering Plain
The Water of the Wondrous Isles
The Story of Grettir The Strong
but we never got around to reading them in class. They're in my "To Read" list though.
If anyone is interested, there are copies of the books I have mentioned above on Project Gutenberg.