IT started with a terrible roar. When the wall of a six-storey tenement in Edinburgh’s Old Town collapsed in 1751, bringing down the building and with it the families who lived there, the city fathers realised something must be done. Their first response was to demolish all other rotten tenements but this was not enough.

Conversation promptly turned to constructing a new, improved Edinburgh on the land across the old sump of the North Loch. This was a stretch of empty countryside that, in a sketch of the time, looks like a Dutch landscape with a distant windmill, a smattering of houses and orchard trees, and precious little else.

The teeming, insanitary dark streets and wynds of the medieval city were rich in character yet they were not only dangerous to health but they also made it hard for the capital to attract and keep the right sort if it was to prosper in this glorious age of opportunity. Thus the concept of the New Town was born, a venture that was to architects and builders and its first inhabitants what America was to the Pilgrim Fathers: a chance to make fame and fortune and start afresh.

In 1766, a competition was called for the best plan for an ambitious development on this difficult, hilly terrain. It was won by the young James Craig and, with a speed that must make modern developers weep, his proposals – modified to the town councillors’ taste – were ratified in July the following year. Builders moved in to clear the land and lay foundations.

July 2017 thus marks 250 years since the start of one of the most remarkable feats of city planning in Europe. Anniversaries are commonplace but this one represents something greater than the brick and mortar of the godfather of all overspills. Craig’s simple geometric plan has been described as “a poor affair” by architectural historian AJ Youngson when compared with sophisticated new towns such as Nancy in France. While it was essentially a plain grid, it was perfectly adapted to the hillocky, craggy land on which it lay. By taking advantage of its setting the design added character, subtlety and light to what might otherwise have been an almost soulless design.

Enlightenment comes in many shapes but Edinburgh’s New Town, whose building was not completed until the 1850s, was the tangible expression of Scotland’s role in the vanguard of intellectual flowering. No wonder people wanted to escape the cramped, filthy, odiferous streets beneath the Castle, hemmed in by the ancient Flodden wall, where the ghosts of punitive former days lurked around every corner.

In the airy boulevards and light-filled Georgian New Town flats and mansions, it was possible to escape from the past and start thinking of the future. In a paean to his hometown, A Work of Beauty, Alexander McCall Smith writes that “it is to the eternal benefit of Edinburgh that King George approved of ‘this plan of the New Streets and Squares intended for his ancient capital of North Britain’ before he went mad.”

Some contemporaries might have said it showed him already losing his mind. Critics of the New Town abounded, among them Robert Louis Stevenson, who castigated Craig for turning buildings’ backs to the best views. “But we have some possessions that not even the infuriate zeal of builders can utterly abolish and destroy,” he wrote, meaning Arthur’s Seat and the Firth of Forth.

Little is known about the architect who transformed the capital. Only recently, Craig’s date of birth was discovered to be 1739 but doubt remains over precisely who his parents were. All that is certain is that, after this glorious start to his career, things hurtled downhill and he died, penurious and not much liked, in 1795. Thanks to him, however, Scotland visibly and confidently embraced the modern age. Although it had been hoped that the landed aristocracy would flock to the New Town, most preferred to head for London.

Instead, St Andrew Square, George Street, Charlotte Square and the others became home to the middle classes, luring them from their old haunts, starting the postcode snobbery that continues to this day. Gone was a time when judges and jailbirds lived in the same tenement. Princes Street Gardens had become a cordon sanitaire.

As the anniversary approaches, however, there is a sense of unease. It is a date to send celebratory fireworks into the sky, but one wonders if there will be much appetite for that. Not since the 1950s has there been so much fear and furore over Edinburgh’s development. Writing in the latest edition of Prospect magazine, architectural expert Owen Hatherley castigated the “golden turd” hotel planned for the top of Leith Walk as “a style which can only be described as excremental”.

He threw more kindling onto the ever-smouldering controversy by asking why “in one of the most protected urban ensembles in the world” it had been allowed.To this can be added anxiety over the renewed “Mickey Mouse” proposals for the Royal High School hotel and, perhaps most bitterly opposed of all, a prospective multi-storey hotel in the Cowgate that will block light from Carnegie-endowed Central Library on George IV Bridge. So appalled are protestors that they are taking the city council to court.

In a year when the New Town should be enjoying the acclaim that its far-sighted progenitors and architects deserve, Edinburgh is instead riven by feuding and furious recrimination. Among those who care about protecting the essence of the capital’s astounding – but not indestructible – elegance and air there is a deepening mood of embattlement and despair. That citizens need to resort to the courts is as severe an indictment of the council’s blinkered commercial priorities as could be imagined.

Yet there is nothing new in this. Perhaps, in fact, a glimmer of hope can be found in one of the city’s darker periods. In the early 1800s, the almost bankrupt town council intended to build over the gardens in Princes Street and Queen Street. As Connie Byrom writes in her history of the New Town’s gardens, this dreadful fate was averted only by “a great deal of effort and financial commitment from the New Town residents themselves”. It might be cold comfort for today’s defenders and champions but it does at least show that the authorities’ pig-headed arrogance and ignorance are only the latest in a long and ignoble history of threats to this most magnificent and resilient city.