Walt Disney's The Old Mill (1937)

Nowadays, we take for granted that animation can be almost lifelike - but it all had to start somewhere. While making Snow White and the Seven Dwarfs, Walt had his animators push themselves on this short - The Old Mill. He wanted to see how far they could go with lighting, color and realism to exemplify their special effects capabilities within the limitations of 2D. They mimicked actual animal behavior, water ripples, synchronized movements (of the windmill cogs), etc. Remember, this was all new at the time.
     The Old Mill was such a success, Walt won an Oscar for it. Try to enjoy it through the eyes of when nobody had ever done this before and it's pretty darned amazing.

Thanks to The Kid Should See This for the heads up.

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