On 7 November 1925 the Evening Argus reported that 'the possibility of "a British Hollywood" in the neighbourhood of Brighton is being discussed. For such a purpose the district has many excellent sites to offer and advantages in the way of clear air and sunshine that could hardly be excelled. Inquiry yesterday, however, showed that the idea is still in the embryonic stage.'
      During the early 1920s British film production went into a dramatic decline. From a total of 145 films in 1920 the number had dropped to only 45 in 1925. This coincided with a boom in cinema building, the Regent in Brighton being in the forefront of the trend. As early as 1921 a British National Film League had been formed 'to encourage the production and exhibition of British-made films' but had little impact, even when it staged a British Film Week in 1923, which the President of the Board of Trade later said 'by giving a chance to the worst films, did so much harm'. By 1925 British films accounted for only five per cent of business at the UK box office, the rest being almost exclusively American. Almost a third of America's global film export earnings came from Britain.
      The situation was no better in much of the rest of the world. The response, where there was one, was to introduce a quota to protect indigenous production. Germany introduced a stringent quota in 1921, replaced from 1 January 1925 by a quota of one imported film for each German production; that year was the first in which American films' share of the German market overtook native product as Paramount and MGM bailed out the ailing Ufa production company in return for distribution guarantees for their films in Germany. Hungary and Italy also introduced quotas now and France followed suit in 1928.
      In other parts of the British Empire there was concern that American dominance was drowning out the message of Britishness. Issues of trade as well as culture were being affected. In May Charles Tennyson, the deputy director of the Federation of British Industry (FBI), wrote a memorandum to the War Office saying, 'At the present moment, cinema audiences in this country and the Dominions are being shown almost entirely American films, depicting American life and ideas. This is actually having a reaction upon the demand for goods in favour of American styles.'
      The House of Lords debated the crisis in May 1925. Lord Newton proposed 'a Departmental Committee to inquire into the causes of the present depression of the industry and to make recommendations as to the best means of re-establishing this industry having regard to the industrial, commercial, educational, and Imperial interests involved'.

American films if they were all good, but as a matter of fact, to speak quite plainly, they consist of rubbish. I am told rubbish is the only thing which pays. If … our people are content to witness perpetual rubbish, let it, at any rate, be English rubbish in preference to American rubbish, because in producing English rubbish the money will at least be spent in this country.'

It was the cultural argument that mainly exercised the writers of a letter to the Daily Telegraph:.

Important as is the commercial aspect of this problem [American domination of British cinema], high national and patriotic interests are involved. No-one who has followed the development of this new form of popular entertainment can be in any doubt as to the immense importance of films as subtle means of propaganda, none the less powerful because it is indirect. Films have an atmosphere of their own. The bulk of films shown in this country have, to say the least of it, a non-British atmosphere. These films are shown in our Dominions, Colonies and Dependencies, and in all the countries of the world outside the British Commonwealth of Nations. Many of them are inferior productions, neither healthy nor patriotic in tone, while the psychological influences which they convey may have far-reaching consequences.

The letter was signed by some of the most eminent cultural and business figures of the day, including the poet laureate Robert Bridges, the novelist Thomas Hardy, the composer Edward Elgar, Lord Burnham, proprietor of the Daily Telegraph, Gordon Selfridge of department store fame, and Cecil Harmsworth, a Liberal politician and member of the newspaper family.
      The topic rumbled on over the coming weeks but the process of working towards any effective action was hampered by a lack of cohesion within the industry. This shortcoming had been referred to in the Lords debate by Lord Gorell, who pointed out that among other advantages enjoyed by the American industry was the unity of the three branches—production, distribution and exhibition—under a single organisation, headed by 'an American ex-Cabinet Minister'. This was not entirely accurate as the Motion Picture Producers and Distributors Association (MPPDA) did not include exhibitors per se but its founding president was Will H Hays, who had resigned in 1922 from his post as United States Postmaster General in the Harding administration to head the association. Thus began the close and powerful relationship of the film industry and Washington, working to ensure that American dominance in world film markets is not eroded.
      Further requests for a committee of inquiry met with the response that the government was conducting its own investigations but finding that the industry was too divided over the issue for agreement to be reached easily and quickly. The matter was mentioned in passing by the prime minister, Stanley Baldwin, in a House of Commons debate on a motion of no confidence in the government because of the 'rapid and alarming growth in the numbers of unemployed'. Baldwin said:

I think the time has come when the position of [the film] industry in this country should be examined with a view to seeing whether it be not possible, as it is desirable on national grounds, to see that the larger proportion of the films exhibited in this country are British, having regard ... to the enormous power which the film is developing for propaganda purposes, and the danger to which we in this country and our Empire subject ourselves if we allow that method of propaganda to be entirely in the hands of foreign countries.

'Foreign countries', of course, meant America. Philip Snowden, Chancellor of the Exchequer in the shortlived Labour government of the previous year, could not resist the chance to snipe: 'He thinks that the development of the film industry would solve the unemployment problem. … He cannot provide work for the unemployed and, therefore, he proposes to give them British films.'
      Trade paper Kine Weekly added to the debate: 'Supposing 95 per cent of our school books were written and published for us in the United States of America, Germany and France. What would be the nature of the outcry raised? And yet the position is not dissimilar.'

At the end of July 1925 the President of the Board of Trade, Sir Philip Cunliffe-Lister, whose own instincts were in favour of protectionism, met a delegation from the Federation of British Industries (FBI). The following week he met members of the Cinematograph Exhibitors Association (CEA). The government's preference was to let the industry come up with its own solution. Each faction had its own proposals to rescue the situation. Towards the end of the year the Board of Trade was arguing the possibility of an imposed screen quota for British films—something the CEA strenuously opposed.
      In November the idea of building a new studio, a 'film city', emerged. As envisaged, the scheme would create a major production site with all necessary facilities available in a central unit for use by producers, including equipment, scenic design and construction, costumes, lighting and an adequate number of stages. The prime mover of the project was the financier Edward Berrington Behrens. The initial thinking was to build the studio close to London at Wembley, where the stadium had opened in 1923 and the second British Empire Exhibition had just been held. However, the area was regarded as being too susceptible to fog.
      During November Brighton Corporation offered to provide land, although the government was apparently unaware of this when questioned in the House of Commons at the end of the month. Already the possibility was mooted that the scheme could be part-funded by the government under the Trade Facilities Act 1921, the purpose of which was to provide loans for capital projects to promote employment.
      When the Sussex branch of the CEA held its annual dinner at the Regent cinema's restaurant in Brighton on 12 January 1926, the association's president, Thomas Ormiston, gave a press conference at which he said: 'There are great hopes that we shall have a national film studio in Brighton. There is, indeed, every possibility that it will happen. We are not wholly agreed in the trade as to the best methods of fostering British film production, but we are all agreed that the matter calls for some special and intensive effort. … We are, of course, being pressed by the government. The government have come to realise that films are now a matter of national importance. They have promised assistance if we can arrive at agreement, and I am optimistic that agreement will before long be attained.

The town's two MPs were invited to the dinner but sent apologies. Moreover, the questions in the Commons had been put by the member for Southwark Central, Harry Day (who was later one of the actual POWs involved in 'the great escape'). This may suggest that support for the Brighton project had not been as efficiently co-ordinated as it might have been. However, one of its more ardent advocates was E E Lyons, who had opened the Academy Cinema in West Street, Brighton in 1911 and was now also a local councillor. He was head of the Biocolour cinema circuit that, with 17 cinemas, was the fifth largest chain in the country.
      Nonetheless, a little over a week later, Behrens held meetings with interested parties in Brighton on 21 January 1926. He met the General Purposes Committee of the Council, which passed a resolution 'that, subject to the scheme being assisted as a National Scheme by the government under the Trades Facilities Acts or otherwise, the Council would give all possible support to the scheme and facilitate the provision of a site in Whitehawk Valley and the supply of electricity; and that the East Brighton Estate Sub-Committee be empowered to carry out the negotiations and submit a complete report to the Council'.
      Behrens had spent the morning with the subcommittee, explaining the need to have the ground levelled, electricity laid on and an access road to be built capable of taking heavy traffic. The expected cost was put at £300,000, half of which Behrens expected to come from central government. The proposed site at the bottom of the Whitehawk Valley had an area of 76 acres on land outside the borough boundary (it was technically in Ovingdean parish) but had been bought by Brighton in 1913 to protect the town as a form of green belt. It is now part of East Brighton Park.
      The news spread across the Atlantic. The New York Times (24 January 1926) reported that 'the scheme for the establishment of a British national film studio has so far progressed that a site has been selected at Whitehawk, at the bottom of a picturesque valley near the sea at Brighton.' It is surprising, therefore, to find that before getting to the first item on the agenda for the Cabinet meeting on 26 February 1926, the President of the Board of Trade, (by now Sir) Philip Cunliffe-Lister, rebuked his colleagues that his proposals for the film industry had been leaked to the Daily Express on 22 February. Nonetheless, the points agreed by the Cabinet were positive in tone:

(1) That we recognise the national importance of British Films.
(2) That we are ready to take the exhibitors at their word and will leave them to make a genuine voluntary effort to take as from a given date in the future an agreed proportion of British films. They should agree with the producers to set up a trade body to settle disputes and to make a return to me [Cunliffe-Lister], say quarterly, of the proportion of British films shown.
(3) That if the quota is not realised, or nearly so, within an experimental period of, say, one year from the given date, we will enforce it by legislation.
(4) That we are prepared to legislate against blockbooking if the exhibitors represent to us that legislation is necessary. The general lines of the legislation would be that after a given date in the future:-
(a) a contract to show a film made before the film has been "trade-shown" should be unenforceable at law.
(b) A contract to take a film which was not to be shown within six months should be unenforceable.
(5) That we should give our blessing to the idea of a British studio, provided a sound scheme with proper financial backing is put forward (as it is hoped the Brighton scheme will be); and that it should be open to the organisers of such a studio to apply for a guarantee under the Trade Facilities Act in respect of any capital works involved.
(6) That the President of the Board of Trade should be authorised to state that we would welcome American co-operation, but he should keep in close touch with the Chancellor of the Exchequer in order not to close the door to taxation of the American film industry if it is found that it is feasible and desirable and the moment appropriate.

The government continued to prevaricate, Cunliffe-Lister merely saying in the Commons that he hoped to make a statement shortly. When asked by the MP for Blackpool, Sir Walter de Frece—who owned the Hippodrome in Brighton but clearly had a different loyalty as an MP—to consider the 'superior claims of many other seaside resorts', Cunliffe-Lister replied that he had no funds at his disposal 'from which a grant can be given to a proposal of the kind mentioned.' He repeated to Harry Day a week later that no financial assistance had been promised for the Brighton scheme. Not quite the impression given previously.
      Discussions and negotiations dragged on into the summer and the Brighton studio was the major topic when the CEA again held its annual conference in Brighton in June 1926. The CEA favoured the scheme because it was seen as the best way to avoid the imposition of a quota along the lines adopted elsewhere in Europe. The Federation of British Industries (FBI) set up a Film Producers' Group. The 1926 Imperial Conference, bringing together representatives of all the countries in the Empire, proposed an Empire film market to challenge the hegemony of Hollywood and an Empire Film Institute was founded in London.
      Across the Atlantic, Congress voted special funds for the Department of Commerce to create a new Motion Picture Section to collect information about foreign film markets. The US State Department instructed its embassies to report all instances of anti-American activity and feeling concerning films—Federal government working for its national economic and cultural interests.
      And in Britain? The Brighton studio scheme was never heard of again and the pan-industry consensus that the government sought as a precursor to intervention never emerged. In February 1926 the CEA complained that the distributors' organisation, the Kinematograph Renters' Association, had rejected the proposal for a central studio and abolition of block-booking because it did not also include a screen quota.
      So the government finally took the initiative by passing legislation, the Cinematograph Films Act 1927, to introduce a screen quota—the one outcome the exhibitors had not wanted—initially set at only five per cent for exhibitors and 7½ for renters (distributors). In other words, one in 13 of the films offered had to be British, as did a twentieth of the screen time in cinemas. The quota rose steadily and by 1935 had risen to 20 per cent for both. But rather than stimulating the quality production that a Whitehawk studio would have helped to provide, the quota meant that the allocated time had to be filled and anything would do. Quantity became more important than quality. Screen time was partly filled by cheap films, so-called 'quota quickies', that did nothing to enhance British cinema's reputation. This was the British rubbish that Lord Newton had preferred two years earlier.
      Audiences were not impressed. Admissions nationally fell by almost a third from 1,300m in 1928 to just over 900m in the mid 1930s. Despite this, admissions did start to recover from 1937 onwards, helped by a revision of the quota system in the 1938 Cinematograph Film Act. This was to encourage bigger budget films that could compete better internationally—as indeed did happen—but it also led to more American production in the UK, a policy approved by the Board of Trade to the consternation of British producers.
      Cinema-going continued to climb, especially during the war, to reach the all-time peak of 1,635m in 1946. The quota was increased to 25 per cent in October 1947 and then to a massive 45 per cent for long films and 25 per cent for the supporting programme 12 months later, falling again in two annual stages to 30 per cent in September 1950. There it stayed until being halved in January 1982 and suspended altogether on 1 January 1983.
      British film-making struggled on, creating some fine work from the mid 1940s and through the 1950s, buoyed for a time by a strong sense of national identity and increased box office revenue, but always with a sense of doom pervading the industry. As Alastair Sim's film producer character so wittily put it in the partly Brighton-made film Lady Godiva Rides Again (1951): 'Surely you have heard of the British film crisis? What with television to the left of us, Hollywood to the right of us and the government behind us, our industry—laughable term!—is for ever on the brink.' The words were by Frank Launder and Val Valentine. Such industry gloom persisted almost to the end of the century.

One positive outcome of the British National Studio episode was that it raised awareness of the value of film in projecting the national image. Even as the studio scheme was fizzling out, the Empire Marketing Board (EMB) was established in May 1926 by the Board of Trade, supported by the FBI. A young, persistent Scot, John Grierson, joined the staff and produced a report on using film for propaganda.
      Thus, despite a distinct lack of enthusiasm at the Treasury, was born the EMB Film Unit. Headed by Grierson, it attracted some inexperienced but talented young intellectuals who created the British documentary movement and produced some of the country's finest film work of the next two decades, leaving a legacy that survives almost intact in British television to this day.