Because he had not yet matured to the point of understanding that James was speaking not of justification by works, but evidence of true faith (James 2:24).
Not true. Luther understood this well as this citation from his confession proves:
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Apology to the Augsburg Confession From these things it is clear that James does not contradict us, who, when censuring idle and secure minds, that imagine that they have faith, although they do not have it, made a distinction between dead and living faith. 128] He says that that is dead which does not bring forth good works [and fruits of the Spirit obedience, patience, chastity, love]; he says that that is living which brings forth good works. Furthermore, we have frequently already shown what we term faith. For we do not speak of idle knowledge [that merely the history concerning Christ should be known], such as devils have, but of faith which resists the terrors of conscience, and cheers and consoles terrified hearts [the new light and power which the Holy Ghost works in the heart, through which we overcome the terrors of death, of sin, etc.].
Luther taught from James in many of his writings and sermons. What Luther objected to was the Pope raising certain secondary books of the old and new testament including James to the same level as the accepted books on the basis of his infallibility without offering any proof. This was covered in an earlier thread if you check the archives.
Good works prove that faith is real, as all the Reformers taught, but Luther would be appalled at the new enthusiasts who seek divine assurance by looking inward rather than to the outward word.
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Smalcald Articles, Martin Luther In a word, enthusiasm inheres in Adam and his children from the beginning [from the first fall] to the end of the world, [its poison] having been implanted and infused into them by the old dragon, and is the origin, power [life], and strength of all heresy, especially of that of the Papacy and Mahomet. Therefore we ought and must constantly maintain this point, that God does not wish to deal with us otherwise than through the spoken Word and the Sacraments. It is the devil himself whatsoever is extolled as Spirit without the Word and Sacraments.
