During the Great Depression, casting gangsters as heroes created a new film genre that symbolized the decay of American society, as well as the fear that traditional values would not survive the economic crisis. These new crime films were different from the morality tales of the silent era's crime genre. Their ethnic characters, pulling themselves up by the bootstraps, were the new archetypal Americans. 

The first film in this new genre, Little Caesar, depicted the rise of a small-town mobster to the upper echelons of organized crime. Appearing in 1930, it starred Edward G. Robinson as Caesar Enrico Bandello. Unlike earlier gangsters, Bandello lives and dies unrepentant of his crimes. The movie was so successful that Hollywood made more than 50 gangster movies the following year.

The most violent movie of 1932 was Scarface, starring Paul Muni as Tony Camonte, a Chicago mobster. The street battles were fictionalized episodes that clearly depicted the life of the notorious Al Capone. When he viewed a few scenes during filming, Capone was impressed with their authenticity.

Because the film depicted 43 murders, the Motion Picture Production Code refused to give its seal of approval to Scarface. The film was released anyway, with a few changes and the title Scarface: Shame of a Nation. Local censors cut many scenes. The film was also denounced as defamatory by the Order of the Sons of Italy in America.

In the character Tommy Powers, the 1931 gangster flick The Public Enemy presented an all-American anti-hero in the tradition of Tom Sawyer. In this story of Prohibition, James Cagney portrays an Irish American mobster who hates authority and finds respectability stifling. He treats his girlfriends badly, but remains loyal to his mother -- and to his male associates. 

Following the conventions of the era, Powers dies at the end. However, the fact that he is killed by rival gangsters instead of the police symbolized the deterioration of law enforcement and the government. Warner Brothers understood how controversial this ending was, and included the following message at the end: "The end of Tom Powers is the end of every hoodlum. The Public Enemy is not a man, it is not a character, it is a problem we must all face."

In 1933 the National Committee for the Study of Social Values published a study on crime. One of the findings claimed that gangster movies had given convicted criminals their early education. Roman Catholic bishops, a Catholic lay organization called the Legion of Decency, and the International Association of Chiefs of Police all pressured Hollywood to end movie violence. To prevent government censorship, the Motion Picture Producers and Directors Association agreed to enforce its own Production Code. The Code had existed since 1930, but the studios usually ignored it.

The Code's preamble stated, "crime will be shown to be wrong and that the criminal life will be loathed and that the law will at all times prevail." Villains could not be protagonists, and at the end, they had to be dead or in jail. Because gangster films were Hollywood's most profitable movies, the studios were faced with a dilemma.

In 1934 public enemies John Dillinger, Pretty Boy Floyd, and Baby Face Nelson were killed by FBI special agents (slangily called "G-men"), who became an overnight sensation. They were young, college educated, and dynamic. The special agents personified the success of Roosevelt's New Deal, and the revitalization of the country. Showing their success on film seemed a natural substitute for the gangster movie.

G-Men, the first film about the FBI, came out in 1935. It starred James Cagney as Special Agent Brick Davis. He essentially has the same characteristics as Tommy Powers, but he is on the "right side" of the law. The three villains are thinly disguised versions of Dillinger, Floyd, and Nelson. To give the film a documentary-like quality, G-Men shows pictures of the Justice Department building, microscopic shots of bullets and fingerprints, and the FBI firing ranges.

Even though Warner Brothers was presenting G-Men as an official history of the FBI, the agency in no way contributed to it. After its release, the FBI received lots of fan mail regarding the picture. Director J. Edgar Hoover issued a form letter response stating, "This Bureau did not cooperate in the production of G-Men, or in any way endorse this motion picture."

Hollywood followed the success of G-Men with six more FBI pictures. In September 1935, the studios were forced to stop when the British Board of Censors complained that the new FBI films were just as violent as the gangster films. Not wishing to lose its British market, Hollywood entirely deleted gangster characters from its movies for the next several years.