The Cabinet of Dr. Caligari

The narrator Francis (Friedrich Feher), Jane (Lil Dagover) and Cesare (Conrad Veidt) are mentally ill, and "Caligari" is actually the director of the asylum where they are being held.

(This ending was added against the wishes of the creators when the original ending was interpreted as an indictment of the German government.)

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Read more about this film at The Internet Movie Database.
There's an excellent plot summary that can be found here.

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