I don't know about subway vs square. But here is a picture of a bathroom at the hospital I work at that was built in the early 50's. I took these several months ago as I was getting ready to tile my 4x4 wainscot. In my old bathroom it was plastered to replicate 4x4 tiles. This bathroom was built either in the 30's or 40's.

Hospital bathroom:
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Here is my new tile:
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Here is the old plaster embossed tile shapes from the 30's or 40's. Note the versatile white duct tape to cover the gaping holes in the plaster:
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This room had reached the end of its life 15 years ago!
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If you like subway tile, why not use it.

I would say 4x4 would be more period appropriate if that is your concern.