Frank Morgan did not receive an Oscar nomination for portraying Hugo Matuschek in The Shop Around the Corner.
What's notable here is although Morgan's depiction of Matuschek's nervousness does derive some humor for the film, it is not the sole purpose of it in this film. Morgan does not make Matuschek's behavior as simply a joke, because he does not turn him into just a caricature. Morgan actually does something very intelligent in that he creates the sense that as the story progresses Matuschek's behavior slowly becomes not nearly as funny. Technically speaking Morgan allows the humor at Matuschek expense to work because there still seems to be a good spirit in his portrayal, and the nervousness is just his way. As the story progresses though Morgan slowly loses this spirit and there just becomes something far less jovial about his attitude towards everyone. Morgan makes this work especially well because of how naturally and gradually he portrays it. He does not just suddenly change, but rather Morgan realizes the change as though Matuschek is going over something in his mind again and again that is causing him considerable distress.
Eventually this leads him to unexpectedly his best employee Alfred (James Stewart), and in the scene Morgan is very effective by presenting the terribly dour state of mind that Matuschek is in at this time. Morgan is terrific because he so subtly portrays this descent of the man, as his performance shows a man falling apart though as a meek man. When Matuschek attempts suicide Morgan is rather heartbreaking because it is unexpected through wholly earned in the way Morgan made it always something that was there through the way he quietly creates the depression that he only grows until the final breaking point that comes from finding out that his wife has been having an affair. Morgan is great in his next scene where he is attempting to recover from his nervous breakdown and must apologize to Alfred who he had wrongly been suspicious of. Morgan is incredibly moving in depicting the sad state of regret as Matuschek finally verbalizes what has been troubling him for so long. Morgan in the final scenes of the film again does not cheat the character as he does not show a full recovery. Instead Morgan is quite haunting by portraying Matuschek as attempting to rediscover the joy of life, and while there is some success Morgan still coveys that a sadness still remains in the man. It's a very strong and surprisingly nuanced performance by Morgan, that brings a great deal of poignancy to the film's darker moments.