Final answer:
The American film industry in the 1920s was largely privately funded, with major film studios dominating the industry. The government did not play a significant role in funding the industry.
Step-by-step explanation:
The American film industry in the 1920s saw several key developments, but one of the options provided in the question was NOT true regarding its rise. The option that was NOT true is that the American film industry was largely government-funded to keep private sector interests from ideologically influencing this growing mode of entertainment. In reality, the film industry was largely privately funded, with major film studios like Paramount and Metro-Goldwyn-Mayer dominating the industry. Additionally, the film industry was headquartered in Hollywood, California, which became the center of the American film industry by the end of the 1920s.