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Anthony Asquith's Underground (1928) is part thriller, part time capsule: a riveting film from one of the silent era's most ambitious British directors, and an intriguing portrait of 1920s London. In particular, the manners and motifs of the capital's tube system are seen just as they were 85 years ago. Re-released in cinemas this month to tie in with the 150th anniversary of the tube, Underground speaks not just to silent movie buffs but to the quiet public transport geek inside every commuting Londoner.

The underground in Underground is more than a metaphor for the repressed passions of four "ordinary workaday people", it is integral to the plot, and its shadowy locations set the film's tone. From their arrival in 1895, films about trains or set on trains have remained popular; they have pace, rhythm, a clear narrative direction and, more often than not, photogenic landscapes. But films set on the underground are a messier and more claustrophobic proposition. The London tube network, then as now, throws large groups of strangers into short repetitive journeys through dingy tunnels, fostering tedium but also the opportunity for chance meetings and missed connections. Underground follows four characters whose lines intersect in just this way, as one woman's accidental encounter with two strangers leads to romance in one direction and violence in another. Bert and Bill are both in love with Nell, which sets them against each other, and Kate is in love with Bert, which leads her to confront him, and Nell.

While there's no real horror in Underground, as there is in the late-night subterranean stalkings of An American Werewolf in London (1981) or Creep (2004), there's more than a touch of danger in the electrified rails and hurtling trains. But there are none of those films' empty, overlit platforms with gleaming white tiles here. Underground's tubes are gloomy, with deep shadows, and our harried and heartbroken leads are swamped by a busy, inquisitive, crowd. At a time when the rail network and the city was expanding apace, hell is definitely other people – the "teeming multitudes" threatened in the opening intertitle.

Unfortunately for them, there is no privacy in Underground. When the film leaves the tube system, it disembarks only in public spaces, places where people work, such as the pub where some frantic montage editing (eight shots in 12 seconds) and teetering camera angles enliven a beery brawl. The only home we visit is a boarding house, where the mentally unstable Kate (an unnerving performance from spindly Norah Baring) lives in uncomfortable proximity to Bert (slab-faced Cyril McLaglen) – and she is a dressmaker, so her room is her place of work too.

Bert and Kate are the hidden workers who shadow the romantic leads and their more glamorous, more public jobs: Bert is an engineer at the tube's power station, whereas Bill (Brian Aherne) is a porter; Kate sews, while pretty Nell (Elissa Landi) sells fancy scarves in a department store. No wonder, then, that Nell and Bill soak up the sunshine on the top deck of an open bus on their first date, while their counterparts lurk in the darkness.

At the film's end, a crowded tube station lift, crammed with strangers, becomes a trap. But the station is not always so oppressive. Underground's romance begins on the gleaming, newfangled escalators, which provide a "meet-cute" and a burst of physical comedy. Those escalators, a contraption imported from America in the 1910s, are where our lovebirds first see – and are kept apart from – each other: one is going up and the other down. In fact, Bill's job seems mostly to revolve around helping passengers stumble off the moving stairway with their dignity and shopping intact. You'll see what may be the origins of the "stand on the right" mantra here: the base of the old escalators were slanted so, to avoid a tumble, wise travellers kept still, ready to step carefully off with their right foot first.

There's greater peril in Underground's rightly praised chase sequence, the climax of the film. It all begins in the "Chelsea Monster": the now-disused Lots Road power station that kept much of the Metropolitan District Railway running back then. It's a monumental building, and Asquith's camera travels up and around its bulk to give it its due importance. This is where Bert works and where Bill goes to tackle him with Kate.

The scenes that follow the visit to Lots Road are white-knuckle stuff, and not perhaps what you might expect from Asquith, or from British silent film in general. There's an acrobatic pursuit from the roof – across a building site and down into the tunnels of the tube – before that sweaty finale in the lift. Underground has abandoned its romantic-comic beginnings in favour of action: less Sliding Doors (1998), more The Taking of Pelham One Two Three (1974). There's a similar use of the underground for a fatal chase in Fritz Lang's 1941 thriller Man Hunt. That's a pleasingly cyclical connection, as Asquith's predilection for the German Expressionist lighting and composition that Lang mastered in the 20s permeates his film – from the bravura sequence below to the uncanny boarding house, which seems to be lit entirely from the floor, casting black bars and pools of shadow in all directions.

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Lots Road is now crumbling, and those lopsided wooden escalators are long gone. In fact, much that we would recognise about the modern tube has been introduced since Underground was made. You'll see the lettering designed by Leslie Green in the film's first seconds, but the famous "roundel" signs look very different; there are no automated ticket barriers or "mind the gap" announcements, either. The tube map wiggles and sprawls – we are still a few years away from Harry Beck's streamlined "circuit diagram". But the film's jocular opening sequence undercuts all that – and reveals that, at heart, very little has changed. While it's a jolt to see the passengers on Asquith's 1928 tube smoke and drop their stubs on the wooden floor of the carriage, they fight for seats, read each other's newspapers, talk across strangers' laps and generally irritate each other as much as possible. Moreover, just like 21st-century commuters, unless flirting they do their utmost to avoid eye contact.

And perhaps it is better not to look your fellow commuters in the eye. If Underground has a message, 85 years on, it is that you never know what kind of person you will meet on the tube.

• Underground is released by the BFI in cinemas on 11 January, and on DVD/Blu-Ray on 17 June. Extracts are also being shown at the Canary Wharf Screen in London until March as part of Art on the Underground.