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Leading into World War II, Walt Disney Studios was on the verge of bankruptcy. At the time, Walt Disney had a tendency to use all profits from released films towards the production of new films. In 1941, with the release of Fantasia, this policy led to severe economic loss within the company. Walt Disney spent four times more than his planned budget on the production of Fantasia which totaled about $2.8 million. However, Fantasia did not receive the attention Walt Disney thought it would. The release of the film was met with low attendance and poor reviews. In its road-shows of the film, Walt Disney Studios made only $325,000. The studio lost about the equivalent of $15 million in 2015. Other films like Pinocchio also failed to bring in the profits Walt Disney predicted because the the war in Europe had prevented European moviegoers from seeing the film, minimizing the studio's foreign revenue. With the extreme loss in profits and revenue, Walt Disney Studios, unable to keep its many employees on the payroll, laid off many of its animators. This led to a labor strike of nearly half of the studio's remaining 800 employees in the spring of 1941. The strike went on for four weeks until Walt Disney agree to join a labor union. As Walt Disney handled negotiations with the labor union, Roy Disney attempted to persuade the studio's main distributors to invest more money in the film company, trying to secure more production funds for the studio which could no longer afford to offset production costs with employee layoffs. Roy was unsuccessful in finding any new investments.

Walt Disney Studios entered the winter of 1941 still in a financial crisis. On December 8th, 1941, Walt Disney Studios was approached by the United States Navy with a film contract. The contract required that Disney produce twenty war-related animated shorts for the United States government for a compensation of $90,000. Walt Disney Studios received $4,500 for each short it produced which was significantly higher than its standard profit for shorts. Scholar Gerard Raiti suggests that "it it weren't for the US Military, the Walt Disney Company might not exist today" as the compensation from the Navy helped Walt Disney Studios recover from the economic turmoil of early 1941.

Der Fuehrer's Face went on to win the Academy Award for Best Cartoon Short Film.

Donald Gets Drafted was released in 1942. The short starred Donald Duck who gets conscripted into the United States army. The film gave the American public a glimpse into the life of a US soldier, showing Donald getting a medical examination and speaking with his army sergeant. According to film historian Dr. Tracey Mollet, "due to the speed at which [the] film was made and released", for many Americans, it gave the first glimpse into "the reality of life in the forces, before many of them had heard about it from friends, neighbors, or even loved ones".