The incoming Labour government of 1945 took over responsibility for an industry which had had an appalling record for over twenty years. Having made a flying start in 1896 and built up a large home market and not inconsiderable exports, it all but collapsed when it came into open competition with the American film industry after the First World War. By the end of 1924, the last of the major British film studios had gone out of business, not a single full-length feature film was in the course of production, and more than nine out of ten films seen by British people in British cinemas were no longer British but predominantly American.
Faced with these facts Parliament passed the 1927 Cinematograph Films Act which compelled cinema owners to show a certain number of British feature films each year, thus restricting the number of imported films which could be shown, and defined 'British films' in terms of the nationality status of the creative personnel employed and of the location of the production studio. The Act was introduced with great reluctance by the Conservative government of Stanley Baldwin as it breached the commitment to free trade. The reasons were not principally economic but political. As it had been put in Parliament already in 1918, the fledgling medium of film was seen by the ruling circles as 'this modern, up-to-date educational engine . . . perhaps the most valuable means of propaganda'. 1
This perception of film which led to the Cinematographic Films Act of 1927 remained the justification for continuing and indeed extending state intervention in the film industry throughout the Conservative period to such an extent that by the time Labour came into office film was a 'private-sector industry' only in a limited sense. Politically, a degree of ideological, political and 'moral' content -- control through the British Board of Film Censors, unthinkable for the press or publishing, was built up and overt and covert sponsorship for the production of ideologically suitable films was also practised. 2 Economically, protection through the quota was extended in 1938, the MacDonald and Baldwin governments exerted pressure for directing private capital into favoured studios, especially Alexander Korda's London Films producing prestige epics, 3 and when over £3 million had been lost and