In the time after World War I, Germany became cut off from the rest of the world. The government banned America films for a period of five years, leaving a large shortage of films for exhibitors to show. That, combined with extreme inflation of the German currencies, resulted in a boom in German film production. Some filmmakers of the time sought a way to differentiate themselves from American cinema. One of these people was a man named Robert Wiene. In 1920 he released his famous fantasy/horror film The Cabinet of Dr. Caligari and in doing so, launched a new movement that would change filmmaking forever.
Robert Wiene sought to externalize the internal experience of his characters through the ways in which he set up his scenes. This was done primarily with mise-en-scene elements, such as highly stylized sets and painted backgrounds. These were not intended to be realistic, but rather to express how the situation would feel to the character(s).
Thus began the German Expressionist movement. In addition to the stylized sets, German Expressionism was characterized by subjective camera and it’s subject matter. Popular topics included criminals, insanity and the supernatural— including most famously Nosferatu (1922) by director F.W. Mernau.
There was also a branch of German Expressionism that focused on more typical people in modern times, as opposed to period pieces like most Expressionist films.
Other notable films include The Last Laugh (1924) (also by F.W. Mernau) and Metropolis (1927) by Fritz Lang.
German expressionism was more focused on mise-en-scene and innovation in editing was fairly conservative. Iris effects as a motif were common in the movement, as were understated and sometimes stylized acting (with some exceptions).
Though German Expressionism never became mainstream per say, a few films and filmmakers did enjoy financial success both in Germany and abroad. A few films were even shown in England, despite the limitations posed by the Treaty of Versailles. Eventually, however, the great Expressionist directors got carried away and, as inflation wound down, several major German production companies went bankrupt. Hollywood began seducing talented German filmmakers to come to the US, and in the 1930s as Hitler came to power, the trickle to Hollywood became a rushing river.
Though Fritz Lang’s Metropolis is often regarded as the last great German Expressionist film, the concept of mise-en-scene to inform upon characters emotions would eventually become integrated into all genres of modern filmmaking. Certain later directors such a Alfred Hitchcock and Tim Burton were particularly influenced by the movement.