John Graham's early landscapes were particular favorites of Duncan Phillips. They recall the classically inspired modernism of postwar Paris, especially the work of Andre Derain, and reflect Graham's study of Cézanne. Phillips was so enamored with Graham’s landscape paintings that he commissioned him to paint Blue Bay in 1926. In January 1927 he asked about Graham's progress on the painting, which was based on the view through the window shown in Blue Bay and Interior, painted in 1926. Displeased with Graham's first effort, Phillips gave instructions that suggest he wished to pick up the brush himself: "It should be lighter in color...under the dark blue there should be a passage scumble of yellow-green, just a hint of this tone worked into the blue at the horizon's edge."
The final work is significant for its matte, thick application of paint and its abstract forms, which undulate into the distance and yet read as flat patterns on the picture plane. Graham limited the color palette to bold cerulean blue, bright green, and sandy creams, reducing the composition to almost a complete abstraction. The composition has a certain similarity to paintings by Arthur Dove and Rockwell Kent that Phillips had recently acquired and may have shown to Graham. Phillips must have been pleased, for he included Blue Bay in an "experiment station" exhibition he organized for the Baltimore Museum of Art. In 1929, he exhibited sixteen works by Graham, seven of them landscapes; thirteen are still in the collection.