Early 1900s came the new generation of the 1920s

Businessmen began to realize the financial potential for movies. While movies were first shown as part of other forms of entertainment, they soon became the featured attraction themselves. By 1905 the first nickelodeon had opened in Pittsburgh, where customers each paid a nickel to see a full program of a half dozen short films. The opening of theaters completed the elements necessary for an industry: product, technology, producer, purchaser, and distributor.

In 1907, a would-be playwright came to Edison with a filmscript for sale. Edison did not like the script, but he hired its author, David Wark Griffith, as an actor. Griffith refused to use his real name, which he wanted to save for his true profession of the stage, but he needed money and accepted the job. Thus began the career of the man who would turn this entertainment into an art. He began making films himself shortly. His tastes in plots were melodramatic, but his interests in technique were both innovative and scientific. Guided by his cameraman, Billy Bitzer, he began to experiment with editing and shots, finding many ideas for cinematic technique in the sentimental novels and poems of nineteenth-century literature. Gradually he persuaded both audiences and company bosses to accept the idea of a more complicated plot told in a lengthy movie. The result was the first major, long film. In 1915, after unheard-of amounts of time in production, Griffith released The Birth of a Nation, a story of the South during the Civil War and Reconstruction. The racial overtones of the film caused considerable controversy, but the power of the images and the timing of the editing created a work of art whose aesthetic excellence is not questioned. In response to the criticism of his racial views, the next year Griffith directed Intolerance, which interwove four stories of intolerance into a single film. Griffith was to continue as one of America's leading directors until audiences began to lose their taste for melodrama, and other directors had learned his methods. He had been responsible for launching the careers of several directors, such as Raoul Walsh, and numerous actors, such as Lillian and Dorothy Gish, Mary Pickford, and H. B. Walthall.

While Griffith was learning how to get the most from screen actors, Thomas Ince was polishing the art of telling a story efficiently. In the early 1900s, he directed a few films ( Civilization, 1916, is the best known), but he quickly turned his attention to production, leaving the details of directing to others under his close supervision. His talent was for organization, and today he is credited with perfecting the studio system. Film is actually a collaborative art, and Ince learned how to bring the talents of many different people into a system that produced polished films, without the individualizing touches found in those films of Griffith or others who work outside the strict studio system.

One man who learned his trade from Griffith was Mack Sennett. Sennett worked for Griffith for a few years as a director and writer, but his interests were more in comedy than in melodrama. In 1912 he broke away and began to work for an independent company, Keystone. Here he learned to merge the methods of stage slapstick comedy with the techniques of film; the results were the Keystone Cops, Ben Turpin, and Charlie Chaplin. Sennett's films used only the barest plot outline as a frame for comic gags that were improvised and shot quickly. From the Sennett method, Charlie Chaplin developed his own technique and character. He began making shorts under the direction of Sennett, but in 1915 he left and joined with Essenay which agreed to let him write and direct his own films at an unprecedented salary. Here he fleshed out his tramp character; one of his first films for Essenay was The Tramp ( 1915). He continued making films that combined his own comic sense and acrobatic movements with social commentary and along with Mary Pickford became one of the first "stars." Later he made features, such as The Gold Rush ( 1925) and Modern Times ( 1936). Sennett and Chaplin began a period of great film comedy. Buster Keaton combined a deadpan look with remarkable physical ability and timing. He too began making shorts, but soon was directing and starring in features, such as The General ( 1926). Harold Lloyd ( The Freshman, 1925) and Harry Langdon ( The Strong Man, 1926) also created comic characters that demonstrated their individuality and imagination.

From these ingredients came the studio system and the star system. The demands of the moviegoing audiences created a need for a great number of films, and small companies were unable to meet the demands. Adolph Zukor at Paramount and Marcus Loew, Louis B. Mayer, and Irvin Thalberg at Metro-Goldwyn-Mayer quickly learned the means of applying American business methods to this new industry. They bought out their competition and eventually controlled film production, distribution, and exhibition. Even the actors and directors got into the act as Chaplin, Griffith, Pickford, and Douglas Fairbanks joined together to create United Artists, intended at first to distribute the various productions of its founders. Later it too became a studio force, along with Columbia, Fox, Warners, and others.

With the studios came the stars. The public hungered for new heroes and new sex objects, and the studios were quick to give the public what it wanted. Along with the stars who had been established in the early 1900s came the new generation of the 1920s: Rudolph Valentino, Gloria Swanson, Clara Bow. The stars soon became the nucleus of American myth, and the public followed the stars' affairs, marriages, and extravagant lives with keen interest. This was the stuff Hollywood was made of. Fortunately there were behind these stars creative directors, such as Cecil B. DeMille, Eric Von Stroheim, and Henry King, who were able to mold the talents of the stars into movies.