Well, Mark Twain in 1880 had many complaints about the German language, but harsh sounding was not one of them.

http://en.wikisource.org/wiki/The_Awful_German_Language

Interesting bit:

"Verdammt," and its variations and enlargements, are words which have plenty of meaning, but the sounds are so mild and ineffectual that German ladies can use them without sin. German ladies who could not be induced to commit a sin by any persuasion or compulsion, promptly rip out one of these harmless little words when they tear their dresses or don't like the soup. It sounds about as wicked as our "My gracious.""

This really sounds like the opposite.

In the Sherlock Holmes short story collection His last Bow published between 1908 and 1913 Arthur Conan Doyle writes:

“Though unmusical, German is the most expressive of all languages,”

I am under the impression that German culture and language was considered much less threatening before 1870, the Franco-German war and the unification of Germany. Newspaper cartoons depicted Germans as sleepy, vaguely comic hayseeds before 1870. The quotes other users provided about German language around this time show this idea applied to language as well as culture.

However, this attitude began to shift as German military prominence increased. Since the 1870 war only involved France, French writers lead the campaign to recast German culture as aggressive and threatening. As German Imperial politics became more threatening under Kaiser Wilhelm in the 1890-1900s, this attitude became more common generally in Europe. The idea of a harsh and militiaristic German culture became the predominant meme in Western Europe (or at least France and Britain) definitely during WWI, when wartime propaganda cemented this image. As the US entered the war, this image crossed the Atlantic.