Others have covered the technological and practical aspects, but the difference in acting styles that you are noticing is partly the influence of Constantin Stanislavski's System that he developed between 1911 and 1938.

The System (or sometimes "The Method") was based on the idea that human beings are not consciously in control of their emotions and cannot simply summon emotive inspiration on command. One could, however, coax or entice the desired emotions.

At first Stanislavsky included what actors call Emotional Memory (based on French psychologist Theodule Ribot's concept of 'Affective Memory') wherein an actor utilizes memories of his own past experiences to emulate the emotional life of his character. Emotional Memory became a controversial method after Michael Chekhov, one of Stanislavski's protégés, suffered a nervous breakdown. Although Stanislavski shied away from Emotional Memory exercises in his later years, they remain a common (if somewhat controversial) staple of actor training in the Western World. Later, The System was expanded to include the study of physical actions, gesture, verbal/physical communication, and the nature of the Given Circumstances to evoke the actor's own natural emotions for a performance on stage.

Stanislavski believed that if an actor completed all of the necessary steps of The System, the desired emotional state would be produced within the actor and the audience would perceive his/her actions as genuine and truthful.

These ideas began to migrate to the United States in the 1920s where they flourished and were further developed and adapted by American artists like Lee Strasberg, Sanford Meisner, and Stella Adler.

Actors employing these methods began to appear in major screen roles in the late 1930s, but the new, naturalistic style really began to take over in the 1950s-1960s after the success of films like A Streetcar Named Desire. Today, The System and its countless derivatives are so common in actor training that they have almost replaced the older, more representational acting styles completely.

This is only a bare-bones summary of a huge topic. For further reading:

An Actor Prepares, Building a Character, and Creating a Role, by Constantin Stanislavski.

A Dream of Passion: The Development of the Method, by Lee Strasberg

On Acting, by Sanford Meisner

The Art of Acting, by Stella Adler

A little of column A and a little of column B.

First, technique – Film acting at least partially takes place on the editing room. The audience will tend to impress emotions and thoughts on actors depending on the visual context of the shot; this was documented as early as the 1910s, when Russian film-makers, critics and theorists such as Lev Kuleshov started experimenting with montage to construct meaning in film. The same shot of an actor's face would be interpreted differently by the audience depending on what it was cut with – the same expression, alongside a bowl of soup, a casket, or a woman, would indicate hunger, sadness, or lust respectively.

These ideas eventually seeped into film-making all over the world. In Hollywood, European vanguard ideas about film were mainly introduced in two ‘waves,’ the first one being mainly German expatriates who came to America to work on film after the vibrant, experimental vanguard cinema of the Weimar republic collapsed. The second were American film-makers who came into the industry in the sixties and seventies, who had a very different perspective and background from their predecessors; unlike the old guard, they had not only grown up with movies but studied film in an university environment, and were very acquainted with the work of European cinema throughout history as well as the writings of film theorists of the era.

The use of montage and photography to communicate the internal states of characters on screen naturally lends itself to a more subdued style of acting, as the actor is doing less of the work of communicating the character's processes to the audience. If you look at a modern-day prestige drama, especially something on television such as (Say) Mad Men, the so-called ‘Kuleshov Effect’ is doing a lot of the heavy lifting of exposing the characters' emotions to the audience.

In early film, the absence of sound and the preponderance of full-body shots made ‘acting with your whole body’ the norm, and the style of acting that goes with that stuck around after the development of close-up shots (Gradually over the 1910s and 20s) and synchronised audio (Late 1920s and 30s).

It is also true, of course, that the experiences of film-makers outside Hollywood shows that there's no natural or inherent connection between silent film and a ‘histrionic’ style of acting; I feel like the acting style in early Hollywood film is better explained by cultural factors rather than technical limitations of the medium. But speaking of which...

Cultural factors: The very first generation of actors in Hollywood came largely from vaudeville and other forms of popular theatre. They would have been most acquainted with broad comedy and melodrama, genres that aren't exactly known for their restrained performances; and since early narrative film targeted the same audience as vaudeville, those actors, and the style and training they had, were a good fit.

As cinema struggled to gain cultural validation in America and sell itself to middle- and upper-class audiences, film actors increasingly came from a more classical theatre background. This is the mannered, representational performances you see in Classic Hollywood Cinema. It's associated with the (artificial) ‘midatlantic’ English dialect, clarity of enunciation, and a more formal (As in formalism, not formality) approach to acting.

Meanwhile, of course, a cultural revolution was taking place in theatre; the Stanislavski method, developed by Russian theatre actor and director Constantin Stanislavski over the course of the 1910s and 20s. The Method, often called ‘method acting’ does (For some practitioners) involve staying in character for long periods of time, but originally it focused on the idea of the ‘emotional memory,’ using the actor's real memories of his life experiences to build a character. Later, Stanislavski would focus on the study and reproduction of physical actions. This method would eventually not only be brought to America (It is most famously taught at the Actors Studio in New York) but also largely supplant the more mannered classical style. This shift can be seen in later Classical films, starting A Streetcar Named Desire – Directed by Actors Studio founder Elia Kazan. By the time the classical era ended, the method had cemented itself in Hollywood.

Casablanca actually serves as an interesting example since it's something of a mix of different styles/eras of film. The director Michael Curtiz made his first film in 1912 and worked all the way up to the 60s. Bogart and Bergman both came from stage backgrounds. Conrad Veidt appeared in a number of major German films in the 20s before wisely emigrating to England in 1933 and while Peter Lorre's career got started quite a bit later he put together a masterful performance in M in 1931.

So we're dealing with at least three very different approaches to acting and filmmaking. A stage background like Bogart and Bergman had wasn't at all unusual. If you watch some very old silent films you'll see that the acting style is incredibly melodramatic and today almost comically stagey. The vast majority of actors in the early silent period came from the stage and still relied very heavily on body language to convey emotion. Today, this is also exacerbated by filming and projection speed. The silent film period didn't have a true standard filming and projection speed like we do today as Kevin Brownlow notes. (Hopefully this link is okay, it seems the original page his article was on is down) Typically it was around 16 FPS, although it could vary quite a bit depending on director or projector. When a film that was shot at 15/16/17 FPS is projected at today's speed of 24 FPS movement becomes jerky and visibly looks off.

Fortunately, directors and actors figured out fairly quickly that the incredibly stage-based style of acting worked against what film could do. There are a number of different people you can point to, but the most prominent were D.W. Griffith and Lillian Gish. Gish's acting style is still far from naturalistic by today's standards but it's a huge leap forward in terms of how well she's using her face and more reserved body language to express herself. Griffith also made frequent use of close-ups in his films which you can also pick up from those two clips. Jump forward about a decade in America and you'll see that acting has become more sophisticated but it's still distinctly old fashioned. By the early 30s sound film is becoming predominant and acting styles can take another big leap forward. If you take a director like, say, Ernst Lubitsch who was already masterful at using and directing actors and give him sound he can do some wonderful things. Acting overseas was of the same sort of quality as you can see in a film like M or The Passion of Joan of Arc. If we go back to Vedit for just a second though, you'll see a far more impressionistic and decidedly non-natural style of acting. Germany's film culture/history in the 20s and 30s is another huge topic though and I'm afraid I've gone on at length enough.

I hope I've provided a somewhat different perspective on the differences in acting style. If you look at it purely from film history in the 30s and 40s you get actors and directors in Hollywood from all sorts of different backgrounds. At the time you easily could've seen a Hollywood film directed by a German that starred a Swede. Hollywood had an absolutely rapacious appetite for talent and once Hitler came to power in 1933 it gladly sheltered all the German talent it hadn't already lured away. Theatre's influence on film still hasn't completely vanished. Plenty of actors get their start on the stage to this day and the same was certainly true 60+ years ago. Acting style has been developing this whole time as well and technological developments (particularly the introduction of sound) have had an enormous influence on how actors act in film. When you throw in the incredibly varied cultural and artistic backgrounds artists in Hollywood had at the time you're practically bound to get vestiges of all sorts of different eras of film and theatre popping up.

as a sidenote, it might be worth noting that modern acting, while more realistic than acting from older generations, isnt aimed so much at realism as it is selling the story. we can see this by comparing real life footage with scenes from cinema. real life is often much more awkward, stilted, less dramatic, and more ambiguous. a very obvious example of this is choreographed fight scenes vs. actual street fights. but this is true even for dramatic scenes of dialogue.

so both older generations and newer ones are attempting to tell a story in their acting. the difference is, over time audiences have developed a taste for increasingly realistic story telling. thus contemporary actors often deliver more realistic performances.

I'm not a historian, but studied theatre and film in college. I think technological changes have a lot to do with it, but acting style as well. There's a semi-famous story of Sir Lawrence Olivier (a classically trained actor) during the filming of Marathon Man. He saw Dustin Hoffman (a practitioner of Method) preparing for an upcoming scene where he was supposed to be very excited, amped up, etc... by running around and hitting a punching bag, that type of thing. Olivier asked him what he was doing, and after Hoffman explained it Olivier replied "my dear boy, have you tried acting?" Its important to note that this story may be entirely apocryphal, but it fits with both men's acting styles and personalities.

I think the adoption of Method has little to do with the change in perception of old films, but WHEN it was adopted is the major demarcation point. Prior to the widespread use of Method (and other newer forms of character building for actors in film specifically) almost all actors were trained classically, that is for stage acting. In stage acting you're trained to speak with a non-accent (often called a mid-atlantic accent) to be more easily understood by a theatre audience. Also to speak from chest (as opposed to speaking from the back of the throat or from the mouth which are more natural) as it caused greater vocal projection. And finally classical training taught actors to enunciate every word crisply and clearly, again to aid in being understood by the audience. None of these techniques were needed by film actors, as microphones picked up sounds at far lower levels than a dude sitting in the 50th row of the balcony at a theatre. Because of this, old film actors seem to be speaking in a way that is totally unnatural and forced, which is a big part of why those films seem less realistic to us today. You can see that is less about the adoption of Method because a chabge to any acting style more geared toward normal speech (and body movements, as classically trained actors moved differently as well) would produce the same demarcation point.

For me, the most interesting document pertaining to this question is Elia Kazan's A Streetcar Named Desire from 1951. This was a film that recognized the distinction between the older style of acting and the new style based on "method acting," and found an ingenious way to use both styles by deliberately contrasting them to make a point about the older, rural South and the rising urban culture. Anybody interested in this question should be sure to watch A Streetcar Named Desire.

Vivien Leigh, most famous for her role as Scarlett in Gone with the Wind, represents the old-school, theatrical acting style. Marlon Brando represents the new "realistic" or naturalistic style based on "method." His portrayal of Stanley Kowalski here was an explosive cinematic debut and made him an instant star and the acting ideal for generations of young male actors to follow. You've witnessed the influence of Brando when you've watched Al Pacino, Robert DeNiro, James Dean, Sean Penn, Jack Nicholson, Ryan Gosling, or Christian Bale. These are just some of the actors who eagerly acknowledge Brando's influence.

The two styles are so different that they normally wouldn't have worked well together in the same movie. Brando's naturalistic acting highlights the staged, affected qualities of Leigh's performance.

But the contrast serves a purpose in the film, because Leigh's character, Blanche Dubois, represents an older, more refined and affected (and ultimately false) way of being. Stanley Kuwolski represents a more raw, direct, unrefined, immediate way of being. Tennessee Williams' play, upon which the movie is based, is interested in looking at these two ways of being and contrasting them, showing how one is replacing the other, acknowledging how this new way is more "real" and maybe more "natural," but asking also if it is more brutal and ugly, and asking us to question this transition from an elaborately staged way of life to one more direct and unaffected.

For these purposes, the two contrasting styles work beautifully, and Leigh and Brando add their own particular dimension to the themes of the play.

On top of that (or underneath that?) the movie makes a fascinating meta-statement about the changing nature of movie acting, providing an effective and informative illustration of the distinction the original poster recognized and questioned.

Reading through the comments and answers I am struck by something that doesn't seem to appear at all; the fact that the films are a product of the age itself. What I mean is that accents, cultural touchstones, slang terms, the aesthetics of the time - what is an 'attractive' man or woman, what voices or cadences are considered attractive or 'sexy' - as well as what was expected of films in that period all play a factor. Method or not, frame rate or not, if a film didn't adhere to the aesthetic of the time then it did not do well, period.

This can also be explored in pictures, or even letter writing, to some degree. Why doesn't anyone smile in old pictures - the myth that old pictures took 20 minutes or so persists in my history classes and yet it is not completely true. By the end of the 19th century, photos were relatively instantaneous and yet few still smiled. Why? were people much more grim back then? Did they 'invent' smiling some time in the 20th century? No, it was expected of people - adults and children alike - to be somber for posterity and smiling was inappropriate for the medium. Furthermore, what about certain slang words - things like 'confab' or 'chewing the fat' or 'cut the mustard' or 'the bee's knees'- just don't have the contemporary meaning or usage that they used to; they sound archaic. Modern watchers who hear such things are instantly taken out of the narrative and reminded that they're watching an old film, thus making the acting seem a little 'worse' for lack of a better term.

just my two cents.

Most of the answers here seems to focus in American cinema and the advent of method acting. A similar thing happened in Europe, to exemplify, I've use Dreyer and Bresson. Party because they thematicly made very similar films, partly because they both filmed jeanne d'arc. Bresson had a very strong feeling that cinema was not theatre. That all influence would be bad as it would (as in Hollywood) dilude the artform (film). In his book notes on cinematographie he discusses how to create reality. Most famously he calls his actors models, unlike the method actors he forces them not to act. The timeframe is about the same as Brando in the US, Perhaps a few years earlier. Unfortunely im not knowledgable enough about later cinema to spak about how it affected godard, Resnais and others in the new wave. I have read interviews in andre bazins film magazine written by them that makes it highly likely that the more natural acting took another route in Western Europe.

I can find sources in 10 m

I have a related question.

Vintage videos from the 20s and 30s seem like they are fast-forwarded. Charlie Chaplin's films are good examples. Why is that?

I haven't seen it mentioned here, but naturalistic acting was in fact doing just fine in the 1900s (around the switch from one reels to 2+) to 1920s, just prior to the advent of sound. "The Passion of Joan of Arc" which was discovered well after its filming is a masterpiece of silent, no makeup, intense closeups, the works.

Sound is the mechanism that essentially destroyed and rebuilt the industry and had to resort (due to the then bulky, loud machines) to medium/wide shots of people, who were in fact shouting to be heard, and often at a framerate that makes them seem hyper. His Girl Friday, pristine example of that era. It's not a beautiful looking or slow emoting type of movie, for reasons listed above it nearly can't be, its straight from vaudeville as others have pointed out - but it's snappy, witty and works. And had to, for about 25 years.

*For even earlier techniques, Hitch's Sabotage and the 1919 Scarface have no running sound or score, but punctuated intervals of separately recorded dialogue. You kept the intensity of the performance in the faces, in this manner, but the eerie silence sucked rocks and the writing was on the wall. "You ain't heard nothin' yet," indeed.

But the culture of the slow-movement, 'humanist' driven works popped back up after the recorders got smaller, boom mikes got invented, and the aforementioned acting revolutions.

I expect it's more to do with your expectations than anything specific about the movies. I watch a lot of movies from the same time period as Casablanca and far fewer from modern times, and to me the acting in the older movies feels more realistic and the acting in modern movies feels silly.

Regarding method acting, compare Marlon Brando's Stanley in A Streetcar Named Desire, which is one of the best examples of method acting on film. It's an amazing, moving performance -- but does it feel "real" to you? If anything, to me at least, it seems more caricatured and over-the-top than films of the same era.

One thing I remember is that, as a kid, I had trouble following black and white movies, just by virtue of their being in black and white. (It probably didn't help that those movies suffer disproportionately when you watch them on VHS tapes that are copies of copies of copies; I was watching a lot of these in school at the time). However, once I got used to black and white I don't really immediately notice whether a movie is in black and white or color any more, unless the color is used in a dramatically meaningful way.