subtle

On start, subtle sets a background color (if set) to the root window and therefore overwrites any root pixmap set before. To avoid this, you just need to comment out the :background line from your config.

subtle itself has no and will never have either an autostart or way to set a wallpaper directly. Normally you just want to setup your X session and and not subtle. Your ~/.xinitrc is the right place for stuff like this.

A background can easily set with a tool like feh.