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When Walt Disney mortgaged his house and gambled the future of his fledgling studio to begin work on ”Snow White and the Seven Dwarfs” in 1934, the Depression was an inescapable fact in the hard lives of most Americans.

For Disney, the economics of the times made even more shocking the unprecedented budget overrun of ”Snow White.” For four years, 750 studio artists produced more than a million drawings on a film whose cost would rise to a then-staggering sum of $1.5 million–10 times the projected cost.

Ward Kimball, 22 and just out of art school, was one of those artists. Hired in 1934, he labored 240 days–and a lot of nights–to animate a 4 1/2-minute sequence in which the lovable dwarfs show their elf esteem for Snow White by making her some soup. His pay: a decent wage of $40 a week.

After he had turned in his assignment, a message came, summoning the nervous Kimball away from his drawing board. Disney himself wanted to see him. ”That sequence was all done and off to the inking department,” recalled Kimball, 75. ”It was very funny with the dwarfs making a big mess, and it had a song to go with it.

”Walt called me into his office and said, `I don`t know how to tell you this. I love this sequence, but we`re going to have to cut it out of the picture. It`s getting in the way of the story.` Well, there I was with my first big job, and it was quite an honor to be working on the feature, and I was just a kid. I was crushed and heartbroken. All that work. I went home and had a few rum drinks. Then I thought about it, and, you know something, he was right.”

Today, Kimball is a revered gray eminence at the Disney complex in California`s San Fernando Valley–a complex that is a model of cleanliness and order compared with the chaotic sprawl you find on most major studio lots. As he takes his lunch in the executive commissary located–where else?–at the end of Mickey Mouse Drive, Kimball holds court. Young animators busy on the next big Disney cartoon feature, ”Oliver and the Dodger” (an animal version of the Oliver Twist story due for Christmas, 1988), stop by to say hello and seek his counsel.

Kimball is one of the three surviving ”nine old men”–the cadre of brilliant animators who were recruited for ”Snow White” and went on to produce the classics of the studio`s heyday. It was Kimball, in fact, who created ”Pinocchio`s” Jiminy Cricket, a plum assignment that Disney gave the crestfallen Kimball to buoy his spirits a half-century ago.

”Walt used to typecast people, and he thought I was pretty good at funny stuff set to music,” Kimball said.

As usual, Disney was right. Kimball`s surviving contributions to ”Snow White,” which celebrated its 50th anniversary with its recent reissue, are in bringing the slovenly dwarfs to life in their little cottage.

Walt Disney Pictures now has an aggressive new management that has created an enormously successful division (Touchstone Films) that makes movies such as ”Down and Out in Beverly Hills” and ”Ruthless People” to reach audiences far beyond the studio`s traditional kiddie constituency. And the lavishly budgeted ”Basil of Baker Street” and the forthcoming ”Oliver and the Dodger” reflect Disney`s continuing confidence in the appeal of artfully done animated features.

With all this bustling prosperity on the lot, it`s instructive to listen to Kimball recount the beginnings, when things sometimes seemed as dark as the inside of the witch`s cauldron in ”Snow White.”

In 1934, Kimball was among a group of 40 artists invited to a meeting on a small stage at the studio–which until then was known for producing cartoon shorts to accompany the main feature. Disney took the stage and spent four hours telling the story of ”Snow White” and acting out each character as he went along.

It was to be the first feature-length animated film, and it would boast a level of craftsmanship and innovative technology that would startle and enchant the world. With the advent of the double feature in the nation`s theaters, Disney`s short cartoons were being squeezed out. The invention of

”Snow White” was a matter of necessity.

But no one hailed Disney as a visionary. Most thought he was crazy–or at the very least Goofy–to even consider the idea. Originally budgeted at $150,000, the cost of production soon got out of hand, and Disney and his brother Roy were forced to take out an emergency bank loan to complete the project. Around Hollywood, the doomed enterprise was known as ”Disney`s Folly” and prompted the kind of snide jests reserved today for the likes of

”Heaven`s Gate” and ”Ishtar.”

”You should have heard the howls of warning when we started making a full-length cartoon,” Disney later said.

On Dec. 21, 1937, at Los Angeles` now-demolished Carthay Theater, the finished 83-minute film enjoyed a premiere that is a minor legend in itself. Chaplin, Dietrich, Laughton and everyone else who counted in town showed up. They laughed, cried and applauded through the film. Recalled Wolfgang

”Woolie” Reitherman, another of the surviving animators, ”They applauded after individual sequences just as though they were in a legitimate theater. I`ve never seen anything quite like it since.”

The applause hasn`t subsided in the ensuing years, and the all-too-rare re-releases of ”Snow White” only add to its stature as a landmark in the history of both the screen and our popular culture. But back then, said Kimball, all anybody could see was an enormous risk that would wreck the studio if it didn`t work.

Disney`s hard-nosed intuition and his command of a simple and underrated gift–the art of telling a story–are what make it work so well, Kimball said. ”What you have to remember is that we had all come from doing shorts,”

said Kimball, who still lectures on animation and tends to one of the country`s leading collections of railroad cabooses and locomotives in his spare time.

”We were used to going for a laugh and then on to the next gag. The great thing Walt realized about `Snow White` was that you couldn`t just have a lot of shorts strung together. There had to be love scenes and serious sections. People said you could never get away with that stuff in cartoons.

”Walt had never done an (animated) feature before–nobody had,” added Kimball. ”It wasn`t like live-action where you could look at the dailies and figure things out and know where you were going. He had to have the sequences done and look at the whole thing. There were some scenes–like the soup-eating, and the dwarfs building a bed for Snow White, and one where Snow White has a dream–where he could see it was also stopping the flow of the story. That`s what he was good at. He had a great sense of timing and how to arrange the plot.”

Disney may have snipped the soup scene and some other laughs to save the precarious balance of the film, but he also knew how to assure his supply of gags.

Kimball chuckled at the memory.

”He had this bonus system for us and the people in the story department,” said Kimball. ”If you came up with a gag they used, it was $10. If two people had the same joke, then it was five bucks apiece. My best one? I got 10 for suggesting that bit where the dwarfs` noses pop up over the edge of the bed one by one.”

Disney`s ability to recognize what staff members excelled at was unerring. Kimball had no thought of gags when he showed up with his portfolio of landscape paintings. He was working his way through art school in Santa Barbara by doubling as a janitor. He hoped for a career as a book and magazine illustrator in the N.C. Wyeth manner, but Disney looked at his portfolio and saw some illustrations that Kimball had done of an Edgar Allan Poe story. They featured creepy, exaggerated villains skulking through a London fog.

”The guys had their eyes popping out, and he saw the sense of humor there,” Kimball said. ”I`d been to art school, but I didn`t know anything about animation. You had to learn to draw things from all angles.”

More than a million drawings later (just 250,000 were used in the finished film), a movie that truly deserves that overused accolade ”classic” went out to the world. There was one assignment, revealed Kimball, that nobody wanted to draw–a fate worse than having Walt throw one of your gags out of the picture.

”Nobody wanted to draw the prince,” laughed Kimball. ”He`s such a wimp.”