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Around 1900, Vienna was a city of vibrant, stimulating intellectual life, a dynamic capital of elite's that did pioneering work in many fields. Otto Wagner remarked in 1905 that "in spite of unfavourable conditions, Vienna is marching at the head of cultural nations". In a similar vein, international critics noted that Vienna was virtually unsurpassed in the sheer wealth of modern architecture that it had to offer at the time.

Gustav Klimt and his adherents left the traditionalist guild of fine artists in 1897 and founded their own association ("Secession"). Josef Maria Olbrich built them a house that was a Gesamtkunstwerkin its own right. Otto Wagner put his stamp on architectural Vienna, achieving a break-through for the new style with his Wienzeile houses and constructing stations of the new metropolitan railway in the Jugendstil. Critics, including Hermann Bahr, soon made their appearance, called to the scene by the new style's rapid success.

The new movement, which was joined by Otto Wagner and Josef Hoffmann and had Max Fabiani among its ranks, cut down on décor and advocated the sparing use of geometric and disciplined ornaments, while maintaining the claim to create a Gesamtkunstwerk. Vienna's foremost building from this phase is Otto Wagner's Postal Savings Bank. But it was Adolf Loos who was most persistent in moving towards Modernism: he rejected all ornaments and even turned against the Gesamtkunstwerk concept.

Nevertheless, Modernism was to remain of marginal importance for Viennese architecture over the next decades. A new style known as Heimatstil prevailed, which was rooted in the Biedermeier period. A major representative of this movement that consciously returned to the past was Leopold Bauer, who succeeded Otto Wagner at the Academy of Fine Arts.