The nucleus of Germany's pre-war film industry fell within the Soviet occupation zone. Soviet authorities quickly reopened, and by May 1945, thirty-six Lichtspielhäuser were functioning in the Soviet zone of Berlin. The British and American zones were comparitivley slow at getting the film industry going again. While the Soviet zone played older, non-propogandistic films, the allied zone adhered stictly to a policy of de-Nazification, making extensive use of German motion pictures not associated with National Socialist propoganda. In the name of democracy, both British and American authorities forbade combines and seperated the functions of production, distribution, and exhibition. This fragmentation of the German film industry actually served to prevent the development of a serious competitor. German citizens were shown Welt im Film (World on Film), the official Anglo-American newsreel, in an attempted goal of "educating German public opinion on sound democratic lines."
Film policy in the American zone was guided by the Office of War Information Overseas Motion Picture Bureau (OWI). During the spring of 1945, German films were confiscated by the OWI in hopes of impressing upon the German people their responsibility for the war. Short documentaries of concentration camps were shown to German audiences during the first weeks of occupation. The OWI regarded film as a tool for the reeducation of the Germans. These films lacked entertainment value and were considered boring by most Germans. Germans were, however, curious to see certain American films such as Gone With the Wind, which had been censored during the Nazi era. But the film was not allowed in Germany as it did not meet the objective of reeducation.
The first post-war German production to recieve an American license was Und über uns der Himmel (The Sky Above Us) directed by Josef von Baky. This film portrayed Berlin as it was, with shots of the miles of rubble and the hardships of its citizens. The more destroyed Germany appeared in a film, the more support it received from OWI.
Whether or not the OWI had succeeded in reeducating the Germans, it had succeeded in subordinating the German industry to the U.S., giving the American film a predominance in Germany which it exercises to this day. By 1948-49, about 70% of the pictures exhibited in the American sector were of Hollywood origin. The decade of the 1950's proved to be a time of crisis and transition for the West German film industry. The industry was in dire financial trouble, having lost its international market as well as a large share of its domestic market. German banks refused to make loans to German production companies, so many were forced to depend on private sponsors who were more concerned with making a profit than the artistic value of films. German producers and directors were reluctant to experiment with new techniques or themes. The German film appeared to have reached an artistic dead end.
The 60s proved to be the darkest decade in the history of the postwar commercial German cinema. In 1959 West Germany produced about 106 films, 98 in 1960, and 75 in 1961. Many production companies closed while survivors struggled to maintain their share of the market, now seriously eroded by American competition and the growth of television. The times were epitomized by the return of Fritz Lang who had retired from the American film scence and chose to reenter the German scene after an absence of more than a quarter of a century. He returned in 1958 to direct a new version of Das indische Grabmal. Lang appears to have believed that the screenplay would be as valid in 1958 as it had been in 1920. Unfortunately, that was not the case as his movie was not received well.
The German film seems to have bottomed out with the German western. Der Schatz im Silbersee (The Treasure of Silver Lake) and Flusspriaten des Mississippi (Mississippi Pirates) are two examples of films lacking in originality. As one critic observed, "They look authentic enough; the mountains, streams, plains and even the Red Indians are very familiar; but what is lacking is imagination and style. Often the impression is that directors have sat through many American films and then set out to copy them." It seemed as though the German cinema had entered a downward spiral from which it could not escape.