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Despite the dark impulses that drive many fairy tales, popular nineteenth-century collections were animated by modern optimism. In this article, I contend that two 1887 novellas, Gerhart Hauptmann's Bahnwärter Thiel and Marie von Ebner-Eschenbach's Das Gemeindekind, demonstrate what happened to this optimism and the fairy tale that embodied it at the inception of twentieth-century modernity. I show the way in which these authors use fairy tale frameworks to express a proto-Naturalist worldview and draw out the affinities that make this improbable combination fruitful, the foremost of which was a common concern with poverty and its consequences. Both novellas lack the fairy tale's miraculous resolution of these problems and the modern optimism it expresses. At the same time, each demonstrates the continuities underlying the shift from nineteenth-century modernity to twentieth-century modernism. While Hauptmann's story retains the dream of domestic sanctuary and belief in overwhelming supernatural powers that often characterize the fairy tale, Ebner-Eschenbach's preserves a remnant of humanist hope.