There were two elemental players in the emergence of the classic Hollywood style. They were both hugely affected by the same factors - Economic, social and practical - but tackled the issues in very different ways. There varying methods aided them in creating unique, memorable styles of film.
When the American and, subsequently, the global economies took a dramatic crash in 1929, all industry was affected. The economy was also damaged by the upcoming prospect of a war. Countries focused on and invested in building their armies. The budgets of films had to be cut and this called for drastic alterations to the filmmaking process. MGM Studios decided, with the cut budgets, to make expensive, quality films, just not many of them. This affected what aspects of the films they focused on when filming. MGM used many long, straight shots to incorporate the elaborate, well-made backgrounds (As in the Wizard of Oz). They maintained the themes of elegance and glamour by only hiring conventionally good-looking actors for the main roles. This helped to form one aspect what we know now as ‘the Hollywood Style’.
Another style that might be observed as a hollywood encouraged, was pioneered and developed by Warner Bro's Studios. They concluded, after the Wall Street Crash, to make a lot of low budget films. To keep the budgets as low as possible they had to use intuition that had not, previously, been necessary. They reused a lot of their sets and kept their actors on contracts. Warner used contemporary story lines, whereas MGM used a lot of fantasy stories. In order to give their films a certain degree of verisimilitude, Warner used many close ups and some experimental angles. By doing this they did not have to expose the low quality backgrounds they were using in their films.
All these factors contributed in setting up the format we now understand as a hollywood-unique style.