When to use capital letters in written German

So, as some of you may know by now, I have somehow managed to blag some desk top publishing work laying out a compendium of German poetry.
It was written by an English scholar who spent his formative years in 1930s Germany, so he obviously uses words and a writing style which would seem quite archaic to some.
Here is a sample:

Der Traum

“Sehen Sie diese Blume” sagte der Förster zu mir und
meiner Frau, “sie ist blutrot geworden, anstatt rein und blau und schauen Sie;
jener Baum da oben himmelwärts strebend,
scheint er nicht genau wie ein Mensch zu sein, gesund und lebend?”
“Nun zeige ich Ihnen meinen Vater im Grabe;

Verschieden seit gestern, liegt er im Schatten, ohne Farbe. Nun Sie, “sagt er zu mir,
“gehen Sie schneiden es gibt genug Farnkraut für mehr als Sie beide.”
Ich schnitt und ich schnitt durch finstere Wälder,
durch Tal und Wiese und sonnige Felder.

Am Ende fand ich die Aussicht, die so lang ersehnte;
den Blick auf den Hügel, der in die Ferne sich
dehnte. Der gediehen bildhaft gemusterte Hecken und viel Verstecktes blieb noch zu entdecken,
ein sandiger Weg führte tief hinunter.
War ich gerettet? War mir das Leben munter?

Unruhig erwachend suchte ich nach Deutung,
Nach Sinn und Verständnis und hoffte auf Erläuterung: “Was soll ich gestehen? Fand ich
Wahrheit und Pein? Die Antwort entfaltet sich in dem Wörtchen ‘Keim’.”
Meine verschwindende Hoffnung liegt tief unter der
Erde;

The formatting shown here is different to how it is layed out in my DTP program, but can someone give me a clearer idea about when Capitals should be used in German texts?
In English, a capital letter is used at the beginning of every new sentence and line, am I right in thinking that is not the case in German?
Any other tips appreciated..

My understanding is the first letter in every sentence, plus every noun.

First letter in a sentence, all nouns, no pronouns EXCEPT for second person formal ("Sie") both singular and plural. We used to capitalise nouns in English but that fell out of favour a couple hundred years ago, regaining some popularity for emphasis or distinction of an object.

woof.

And of course for all proper names i.e. Jeff, Kaufhof etc.

Names are nouns, technically "proper nouns" in English, but you knew that already.

woof.

Um yes.

This is the reason I usually change the "language feature" to German whenever I write something in that language. When you write a word incorrectly, such as not capitalizing when you should, it shows up as being incorrect.

Oh and one quirk of capitalising - nationalities/languages are capitalised in English - they are not in German (I think)

Thanks folks.

Really? Are you sure, because i've just been through the whole book and using Find & Replace found about 50 'Du' spelt with uppercase Ds.

With poetry I personally would also tend to capitalise the first letter of each line. But this isn't necessary - and may often be avoided to make a statement - so try and stick to the way the author put it, and query if you're not sure.

I was taught to capitalise Du in letters - but that's probably long since out of date now.

It used to be capitalised (i.e. in letters/e-mails) but that changed a few years ago - best buy a newer edition of your book!

this has changed with the new language reforms. it is perfectly okay (see the Duden) to write "du" with lowercase "d". people still write "Du" because they think it is politer, but it is not wrong if you do not.

Poetic license would allow you to keep the capital for Du - and as the rest of the text and use of language is relatively old fashioned - I would tend to keep it.

I would agree with you there, I want to keep as much of the original soul of the work as possible, (although it will need to be proof read by a native speaker eventually).

"Du" (as well as Deine, Deiner, Dein etc) used to be capitalised in the middle of a sentence when writing a letter to someone. It is no longer required under current rules.