After Snow White's success, Walt began spending more time with Lillian and his daughters. He also quit playing polo, a sport he was previously passionate about. This was after closely witnessing an accident at a match between MGM and the Disney Studios which resulted in the death of Gordon Westcott. Walt's social life, previously confined to the studio, family and polo, was now limited to the studio and family. Yet his dreams and aspirations for his studio made him out of touch with the people he employed. The resulting rush of reality led to a gradual withdrawal from public life, and an obsession with his own private hobby, a miniature railway.

Burbank Breakdown

Walt used the profits he had made from Snow White to build a brand new film studio. The previous studio, called Hyperion, was an organically grown collection of buildings that had expanded from a bungalow into several surrounding buildings, some bought and some erected. The new studio complex was purposefully designed from scratch and was a statement that he had arrived on the filmmaking scene. After Snow White, Walt rushed into making Pinocchio, Bambi and Fantasia without fully planning them, in order to prevent his animators, the largest workforce he would employ, being idle. Only Fantasia held his complete obsessive attention the way that Snow White had. None of these films would return the cost of making them.

In November 1938 tragedy struck. With some of the profit from Snow White, the Disney Brothers bought their parents, Elias and Flora Disney, a new house nearby. Tragically the heater malfunctioned and Flora died of carbon monoxide poisoning in her en-suite bathroom. Walt never forgave himself.

In 1939 the new animation studio was constructed, opening in December. When Walt and Roy showed their father the new building, he kept asking 'What else is it good for?', wanting to know what use the Disneys would find for the studio building when their animation business failed. Walt assured him that they could use it as a hospital, and Elias Disney was more interested in having a tour of the hospital building for when the animation business failed than learning what Walt planned for each room as part of his animation empire. The new building cost $3 million and its design was scrutinised by Walt to ensure that it had a college campus appearance, but remaining clean and efficient. It came complete with a commissary, snack bar, barbershop, gymnasium and male nude sunbathing area. Yet for all its refinement, the new layout seemed impersonal. The distance between departments had gone from in a neighbouring office to different buildings, leading to increased distances between people with different job titles. The most distant office of all was the one containing Walt Disney¹.

When Pinocchio was released, the film failed to make back the money spent on it. This was in part because of the Second World War, which cut off many foreign markets, including the key European markets. The financial failure led to extreme money problems, with the Disney studio making a loss of $260,000 in 1940. In order to raise money, Walt was forced to sell shares in the studio. This was a step he bitterly hated as it had meant that he had to sacrifice some control of his company. Pinocchio was followed by flop after flop; only Dumbo made any profit in the early 1940s.

Strike!

In August 1940 the studio was $3 million in debt, and the bank ordered a reduction in expenses, especially wages. By this time there were over 1,200 members of staff at the studio, working on both feature films and shorts, and the studio was forced to consider letting many of them go, as well as reduce the wages of the rest. Walt began a process he called 'weeding out marginal people' and 'getting rid of deadwood', although he was happy to accept Ub Iwerks back at Disney Studios after his own animation studio had failed.

The atmosphere at the studio became tense when it became apparent that anyone could be fired on the slightest pretext. Other legitimate concerns included resentment that no matter what anyone did, the only credit received was given to Walt Disney. Most of all, the wages situation was a source of frustration. People who did the same job did not receive the same wage. Wages were set by Walt depending on how much he wished to pay you on the day you arrived, and the wages were sometimes augmented by motivational bonuses, paid on an arbitrary basis, seemingly at random.

In December 1940, the Screen Cartoonists Guild informed Walt that they represented the interests of a majority of his employees and had some points to discuss, to which he replied:

If I can't have my own way... if somebody tries to tell me to do something, I will do just the opposite, and if necessary I will close down this studio.

Walt kept trying to assert his authority and refused to negotiate, increasing the tension and exacerbating the situation. In May 1941 Walt fired a large number of his staff who he knew belonged to the SCG Union. Shortly afterwards on 29 May many of his remaining staff went on strike, with Disney films boycotted across America. Organisations such as Technicolor refused to process Disney films in sympathy for the strikers. Estimates of how many employees were on strike have varied from 300 to 700. Walt himself was convinced that the strike was a result of a Communist plot to steal his studio from him. The strikers would later be lampooned in Dumbo as the clowns who ask for a raise.

The strike lasted until 16 September, after which the studio that had begun the year with 1,200 employees now employed 694. Walt spent much of the strike in South America, having a tour of the continent on behalf of the Co-ordinator of Inter-American Affairs, an organisation dedicated to strengthen American ties with South America. He used the time to plan making two cheap films about South America that combined live-action and animation. While he was in South America, Walt's father Elias died on 13 September. Walt chose not to attend the funeral.

Following the strike the Bank of America forbade the lending of more than $3.5 million to the studio, prevented the filming of more feature-length films, and it installed an Executive Committee which included a bank representative to govern the studio. Walt, terrified of losing control of his studio to the Unions, had lost control instead to the bank. Many of Walt's most talented animators who had survived the strike left the studio. Walt himself never forgave the strikers, and by all accounts felt betrayed, finding it difficult to trust his employees or anyone else again.

America at War and Un-American Activities

Dumbo was released to popular acclaim in late 1941, and was scheduled to be the front-cover feature of the December edition of Time magazine, but instead America found itself at war with Japan. The Disney studio was occupied by 500 soldiers on the day of the Pearl Harbour attack, and for the duration of the war Walt was ordered to make films for the American government. Many key animators were drafted into the war. Naval training films and films covering topics close to the government's heart, such as tax evasion, dominated the next few years. Donald Duck was press-ganged into making a propaganda appearance in an Oscar-winning short film originally titled Donald in Nutzi Land, in which Donald wakes up in a nightmare Nazi dystopia. This was later renamed Der Fuehrer's Face after the accompanying song.

Walt was bored, wishing to be at the forefront and create his own propaganda rather than making films to order, and so chose to start his own propaganda campaign. He adapted a controversial book by Major Alexander P de Seversky, Victory Through Air Power, into an animated film, arguing that America's army and navy were redundant and that only an air force equipped with heavy bombers would have any impact on the war. During the war, he also spent more time with his family than he had previously.

In December 1943 Walt joined the Motion Picture Alliance for the Preservation of American Ideals, or MPA for short. This organisation declared that it was created to protect the Hollywood film industry from Communism and other un-American influences. Many members had other conservative, reactionary opinions and agendas, some were openly racist and anti-Semitic; consequently Walt was tarred with the same brush.

In 1947 the House Un-American Activities Committee began an investigation into Communist activity in Hollywood. Walt was a full supporter of this shameful investigation, wanting revenge for the strike that had affected his studio. He also accused the League of Women Voters of being a Communist society behind the strike, a groundless statement he was soon forced to retract.

Also in 1947, when making the 9th Animated Classic film Fun and Fancy Free, for the first time Walt did not voice Mickey Mouse, instead asking Jimmy Macdonald to do so partway through. This was one of the symptoms of Walt losing interest in his own studio. He was strongly involved in making Song of the South, the first Disney film to feature extensive live-action acting, although it was later criticised for being racially insensitive. Despite the understandable concerns expressed that Song of the South could be viewed as portraying a positive image of slavery, Walt was convinced that any negative publicity the film generated was caused by Communists out to get him. Walt did use his influence to ensure that James Baskett won an honorary Oscar in the 1948 Academy Awards.

1950s – Back in the Black

After the war ended, the studio came out of debt and the bank's control faded. Once again, Walt was able to make the films he wished to. He also re-organised the Disney studios and allowed a group of nine senior animators² a role in advising him. These would be nicknamed the 'Nine Old Men' after US President Franklin Roosevelt's nickname for the nine members of the Supreme Court. He also expressed his fascination for wildlife by authorising the making of short nature documentaries he called True Life Adventures, starting with the Oscar-winning 1948 film Seal Island. Despite the name 'True Life Adventures', these documentaries were often staged.

In 1950 the studio recovered some of its pre-war glory by releasing the highly successful Cinderella. While this was in production, the key European markets of Britain and France were again able to show Disney films, but in Britain, film profits were impounded with the insistence that the money be spent in Britain. Unable to relocate the Animation Studio and with $1 million at stake, Walt chose to begin making fully live-action films in Britain, starting with Treasure Island. Overseeing some of the production in Britain as part of a European holiday, and later heavily involved in editing by airmail from America, this became Disney's first, and highly successful, live-action film.

Off the Rails

When he had no freedom to create the films he wished to make and with his studio no longer interesting him, Walt found a new hobby - railways. In 1948 Walt had visited the Chicago Railroad Fair, a commemoration of the railways of America, complete with different displays involving replica recreations of where each railway line went through. This would later prove a key influence on Disneyland.

In late 1948 Walt began manufacturing his own miniature railway, a 7¼-inch gauge model Central Pacific 173. When in 1949 Walt bought the site of his new family home, which he was involved in designing himself, he purchased the house specifically so that he could build an extensive miniature railway circuit in the garden. When plans called for it to go through the area designated as Lillian's flowerbed, leading to a heated argument, a compromise was reached with the construction of a 90ft tunnel beneath the flowerbed. The 2,500ft railway was completed in late 1950 and named the Carolwood Pacific Railroad. The engine he hand-crafted himself was named Lilly Belle after his wife, and was capable of pulling passenger-carrying carriages at speeds up to 30mph. The new home was designed to hold a swimming pool, film screening room, a soda-fountain and ice-cream bar as something his teenage daughters could enjoy.

Image courtesy of NASA