She was a millionaire at 5 and a Hollywood has-been by 7. She was Baby Peggy, the Twenties film star whose career began when she was 19 months and faded after 100 films and the advent of the talkies. Now she is the film historian Diana Serra Cary, who shares her experiences at this weekend’s Slapstick silent comedy festival in Bristol.

“I knew I was the breadwinner from the time I was 3 because my parents quarrelled a lot about my money,” recalls Cary, now a sprightly 87-year-old. By the time she was 5 she had signed a three-picture deal for $3.5 million. “But once the child becomes the breadwinner, it turns the family on its head. They can’t hope to live a normal life.”

At 7, her stardom had faded and her fortune had vanished: “Several managers went off with a bunch of it, and my father’s stepfather, who was in charge of the Baby Peggy Corporation, got away with a million.”

Cary’s story is not only an early example of child-star exploitation but also a valuable link with early Hollywood, a time when studios were little more than barns and directors were learning on the hoof. “The scripts were like Swiss cheese,” says Cary of her numerous comedy shorts. “They left a lot of holes so the comics could ad lib. And each film evolved from day to day — let’s shoot in the park, let’s have a canoe, a fire . . .”

The nascent film industry drew Cary’s father to Los Angeles: “He was a cowboy and, after the First World War, Hollywood was the only place where horsemen were in demand — as stuntmen and riders. My father ended up doubling for Tom Mix.”

A director discovered Cary accidentally when she accompanied her mother and a friend to Century, a studio that specialised in serials and slapstick shorts. She found herself starring as Baby Peggy opposite Brownie the Wonder Dog. “Those films got a global audience,” she says. “I played in spoofs about adults and film stars and ended up having my own company.”

The Slaptick festival, hosted by Paul Merton, will be screening her recently rediscovered first film, Playmates (1921), as well as her most popular feature, Captain January (1924), in which the four-year-old Peggy plays a shipwrecked orphan who is adopted by a kindly old lighthouse keeper (Hobart Bosworth).

“My father left a well-heeled home in Chicago when he was 13 and spent much of his early life breaking horses,” says Cary. “He thought raising children was the same. So I was a mischievous child on screen but did everything my father told me. I learnt very early to earn the respect of my peers. And adults were my peers — the crew, the director, the actors — so I never ever felt I was a little girl.”

Cary recalls once looking over the fence at her Beverly Hills home on a weekday and asking her sister what the kids were doing: “When she said they were playing, I was puzzled. ‘Why aren't they working?’ I asked. I thought all children worked to support their parents.”

Her father couldn’t accept her as anything but Baby Peggy and blocked any ideas of college: “On set, all you got was a ‘snack education’ — morsels here and there. If I hadn’t educated myself I would have ended up living under a bridge.”

Despite her film career being over, seven-year-old Cary was still expected to support the family. For the next three years she toured in vaudeville, enabling her father to buy a ranch in Wyoming which the family then lost during the Depression.

“We were destitute. I was doing these benefit concerts as if I was Lady Bountiful while behind the scenes they were giving us food,” Cary says. “Then I tried a comeback in the talkies at 13 but I knew in my heart it was over.” Her last film was in 1935.

But people wouldn’t let her screen persona go: “My first husband told me I couldn’t have a child because that would mean I wouldn’t be Baby Peggy any more,” says Cary. “She was stalking me. A child 3ft tall was more important than I was.”

After her nine-year marriage ended, Cary, then in her late twenties, forged her own identity, getting a job in a bookstore and changing her first name to Diana. In the Seventies she re-emerged as the author of accounts of the silent-era cowboys and child stars as well as her own memoir and a biography of Jackie Coogan, the screen tyke admired by Chaplin but also fleeced of his fortune.

“I was able to separate myself from Baby Peggy but Jackie tried to live his screen persona. As an adult he could never accept that people no longer adored him. He felt unloved and worthless.”

Cary admits, though, that it took time for her to come to terms with her Hollywood past: “When the talkies came, everyone was so dismissive of the silent era. It was only when I remarried and found that historians were reassessing that era that I realised it was something worth recording for my son. Baby Peggy was no longer an enemy. She had done the best she could do and I was proud of her.”

Cary now lives contentedly in a small town outside San Francisco and has a granddaughter. “And you know,” she says with affection, “she looks exactly like Peggy Baby.”

Slapstick 2006 runs Jan 20-22 at the Watershead, Bristol. Details: www.slapstick.org.uk

Explore Film

• Film Reviews

• Trailers

• DVD

• Oscars

• Cannes

Editor's choice

• U2 at Nou Camp Stadium, Barcelona
• The 50 Best Movie Villains
• The 15 golden rules of theatre etiquette