EDINBURGH had never seen the like. The letters page of the Scotsman was aflame with polite indignation. In 1931, the capital was not ready for the paintings of Edvard Munch.

But the fact that the works by the Norwegian expressionist, painter of The Scream, were shown in Scotland at all tells an important story. The artists of Edinburgh in the 1930s were engaged with the avant-garde in a much more serious way than the city’s traditional demeanour suggested. And they weren’t just consumers of modernity, they were producing it too.

The largely untold story of Scottish modernism is explored in A New Era: Scottish Modern Art 1900-1950, the exhibition currently at the Scottish National Gallery of Modern Art (Modern Two). Curator Alice Strang says: “Scottish artists were aware of the continental developments earlier than we realised and had a much deeper engagement with it. They interpret those developments in original or significant ways. When you put together the sum of the parts, the Scottish context was really important. What is embodied in A New Era is a much more experimental and innovative side to modern Scottish art than has been credited before.”

Under the surface of staid 1930s Edinburgh was a vibrant cultural community, populated by colourful characters. When artist Margaret Mellis moved from Edinburgh to London in 1937 she found, she reflected later, that the city was dull by comparison.

One measure of this is that artists-run organisations were showing cutting-edge European art regularly in their annual exhibitions. The Society of Scottish Artists (SSA), who had brought Munch to Edinburgh in 1931, showed 25 works by the German artist Paul Klee in 1934, Braque and Soutine the following year, and, in 1937, surrealist works by Dali, Picasso and Giorgio de Chirico. The RSA showed works of modernist sculpture from Germany and Scandinavia, and the University of Edinburgh’s Fine Art Society mounted annual exhibitions of modern art from 1936 until 1939 showing artists such as Henry Moore, Ben Nicholson and Barbara Hepworth.

Strang says: “Now foreign travel is so easy and we can call up colour photographs of every single work of art on our phones, it’s really hard for us to appreciate how important it was to be able to see these works in the flesh. Even art journals at the time had very few illustrations and they were almost always black and white. It’s really hard to overstate the importance of these shows.”

It’s also possible to see an immediate impact in the work of Scottish artists. Painters such as William Gillies and William MacTaggart started working in a more expressionist way after seeing Munch, and a pair of harbour scenes by Gillies and John Maxwell in the New Era clearly indicate the influence of Paul Klee. Art historian Philip Long writes: “The effect of Klee’s extraordinary painting on Maxwell and Gillies is evident in their simplified, almost childlike depiction of the harbour scene and their division of the picture surface into areas of abstract shape and colour.”

Scottish artists were also taking the initiative and organising their own exhibitions. In 1939, the New Era Group (from which the current exhibition takes its name) – a group of five artists including William Gear and Tom Pow – held an exhibition of their own work in Gladstone’s Land, Edinburgh, with a clear modernist agenda. They set out their thinking in the catalogue: “The artist creates a work from his total experience, conscious and subconscious, his ideas and sensations harmonised into a formal rhythmic unity.” A photograph from the Evening News at the time shows the group holding Pow’s painting The Crucifixion, a bold modernist statement, clearly drawing on a profound engagement with Picasso and Braque. But the group had only one exhibition before the war intervened.

Influential figures with the art establishment were committed to bringing modernism to Scotland. MacTaggart, who became president of the SSA in 1933, played an important part, as did his wife-to-be, Norwegian-born journalist Fanny Aavatsmark, who was a family friend to the Munchs. Dynamic art historian Herbert Read, who held a post at Edinburgh University in the early 1930s, seems to have used his London contacts to bring important loans to Scotland.

Read was interested in fostering a uniquely Scottish avant-garde style, and he had allies. In a letter to a friend in 1932, he wrote: “It is practically settled (but still secret) that Hubert Wellington is to be the new principal of the College of Art. He is a perfect dear, and he [and] Cursiter [and] I will make just a happy triumvirate.”

Wellington was also well connected. He brought architect and Bauhaus founder Walter Gropius and Russian modernist Serge Chermayeff to Edinburgh as guest lecturers, and, in 1940, advised the young Wilhelmina Barns-Graham to travel to St Ives to meet the artists working there. She became a member of the St Ives group and a pioneer of abstract painting in Britain.

The third man in the triumvirate, Stanley Cursiter, became director of the National Galleries of Scotland in 1930. His interest in modernism is clear: three of his paintings in the New Era exhibition show him experimenting with futurism in 1913. At the National Galleries, he devoted his considerable energies to lobbying for a gallery devoted to modern art.

At the time, no gallery in Edinburgh, public or private, was prepared to show contemporary art, and the National Galleries had a policy of collecting only work by dead artists, but Cursiter was not deterred. He secured funding from manufacturer and philanthropist Andrew Grant and earmarked a site opposite the Portrait Gallery on Queen Street. Having obtained permission to demolish York Buildings (which still stands on the site) he had a design drawn up by architect Alan Reiach, a Bauhaus-inspired white cube, which would have spaces for film, photography and performance.

In 1939, he was poised on the brink of success, before history intervened. It would be 20 more years before the city got its Gallery of Modern Art. Strang says: “If they had managed that before the war, Edinburgh’s role and position in Europe and with regard to contemporary art would have been very different.”

Herbert Read championed the idea of exhibitions of Scandinavian and German art in particular, in order to encourage Scottish artists to look to Northern modernism for inspiration. Speaking at the Scottish Arts Club in the wake of the Munch controversy, he outlined his idea of a Scottish national art movement, self-aware and distinct from the London-centric scene, which would become internationally recognised.

For some of the artists, these ideas had a clear political dimension: at different times artists William McCance and his wife Agnes Miller Parker, Edward Baird and William Johnstone were close to Hugh MacDiarmid, and caught up in his vision for a Scottish cultural renaissance between the wars.

But the story of Scottish modernism is a complex one. There were moments of great promise: Cursiter’s plan for a gallery; the initiative and confidence of the New Era Group; the early work of artists such as William Crozier, who painted the masterpiece Edinburgh (from Salisbury Crags) in 1927. But the potential did not come to fruition. Crozier died in 1930, aged just 37. Other artists retreated into more traditional styles. As the Second World War took its toll, the intellectual and cultural milieu which had thrived in Edinburgh in the 1930s began to fragment.

The painter Tom Pow graduated from Edinburgh College of Art in the early 1930s, full of potential. He was one of the first beneficiaries of an Andrew Grant travelling scholarship, on which he visited France, Italy and Spain. He was enthralled by the Paul Klee and Georges Braque exhibitions in Edinburgh, and he was a leading light of the New Era Group. The paintings which survive from that time show an extraordinary degree of accomplishment and engagement with modernist ideas.

His son, also Tom Pow, an acclaimed poet, says: “We have very little of my father’s work from before the war, however the few pieces we know of show him to be an exceptional artist, conversant with developments in modern European art. Then the war came, and the war took a lot of energy. He said after the war he didn’t quite have the energy he had before (Pow served in the RAF and was retired in 1942 following an injury). I think everybody was very positive about his art and his future, but they had all changed by the time he came back (from the war).”

Pow says his father, who spent the rest of his life working as an art teacher, never stopped drawing and painting, and even produced experimental abstract work, but rarely exhibited. The whereabouts of most of his paintings are unknown. “He wasn’t a great curator of his own work, or a self-promoter. He worked in a solitary way. If [success] had happened, he would have been fine with it, if other people had made it happen, and it looked like they were going to before the war, but he wasn’t going to make it happen for himself.”

Like Pow’s lost paintings, the story of Scottish modernism is not yet fully uncovered. It is to be hoped that more work by scholars will reveal more of this remarkable moment when Edinburgh simmered with modernist energy and the Athens of the North nearly became Britain’s first city of the avant-garde.

A New Era: Scottish Modern Art 1900-1950 is at Scottish National Gallery of Modern Art (Modern Two) until June 10. Admission £10 (£8). Alice Strang will talk about A New Era at the Aye Write Book Festival in Glasgow on March 18 at 8.15pm at the Mitchell Library. Lunchtime talks at the National Galleries on the Mound include Tom Pow talking about his father’s work in The Painter and the Poet (April 24, 12.45pm) and Alice Strang talking about Edinburgh in the 1930s (May 29, 12.45pm)