Here is the complete story about the Alice Comedies, which can over at the Disney Animation Archive at
http://members.lycos.co.uk/pixararch...ceCartoon.html
Alice Comedies are a series of 56 silent cartoons made by Walt Disney between 1924 and 1927, with a live girl acting in Cartoonland.
In late 1922, Walt's was nearing bankruptcy, but was saved when dentist named Thomas McCrum offered Walt a $500 commission to make a live-action dental health film called Tommy Tucker's Tooth. This commission allowed Walt Disney to hire back some of his staff that he had to let go to make good on his debt from his Laugh-0-gram company. This new money also meant that Walt had just enough funds - along with many loans from friends and family (notably Roy Disney)-to try a new type of venture: a series of shorts in which a human character acts among animated characters. This idea was the creation of the Alice Comedies. The Alice Comedies also created Walt's first two major animated characters, which were Julius the Cat and Peg Leg Pete.
In 1923, Walt wrote to Margaret J. Winkler, who was the distributor of the successful "Out Of the Inkwell" series, which was produced by Max Fleischer, telling Margaret of his plans. Then, Walt hired six-year old Virginia Davis to play the part of Alice, and work began on the first ever Alice Comedy called "Alice's Wonderland". However, the short was barely done due to the funds ran out.
Even though the short did get completed, Walt's company was nearing bankruptcy, and even the best of his friends told him that they would be doing him no kindness to lend him any more money. Due to this the Laugh-0-gram Company had come to the end of the road. With much difficulty, Walt raised enough money for the fare, first class fare-to go to Hollywood. His plan being to get right out of animation and become a movie director instead.
In Hollywood he was unsuccessful, like so many others, to break into the movies. In desperation he turned his attentions back to doing animation. So Walt revived the idea of the Alice series, and distributor Margaret Winkler not only declared interest in a trial run of six, offering $1500 each, but generously agreed to pay for each of them immediately on delivery. Walt enlisted Roy Disney to seek finances for the new venture and the banks turned him away. So to finance it Robert Disney, their uncle, eventually agreed to lend them $500.
Margaret Winkler was delighted with the Alice Comedies series, and made good distribution deals for it. However, Walt's constant perfectionism resulted in Walt kept spending more money to try to achieve a better result resulted in more financial troubles. Also, due to this, Walt realized his own limitations as an animator. So, Walt imported Ub Iwerks from Kansas City. (Virginia Davis and her family was also from Kansas City) After Iwerks' arrival, Disney ceased forever to animate cartoons himself. Sadly, Walt could not use Alice's Wonderland, his prototype, as part of the newly released Alice series. His original distributors, Pictorial Clubs of Tennessee, had gone bankrupt, owing the Laugh-O-gram company a great deal of money. Pictorial Clubs of Tennessee's assets although, disastrously from Walt's point of view, not its liabilities - had been passed to its sister-company, Pictorial Clubs of New York. Finally, in 1924, Pictorial Clubs of New York agreed to pay $12,000 by way of compensation, but for this it claimed all the rights in the six Laugh-O-gram cartoons, eight of the "Lafflets" and, miserably, Alice's Wonderland. Walt agreed due to the fact that at the time Walt's company needed the money to pay off its creditors.
Another problem was that Margaret Winkler had gotten married to Charles Mintz, who took over her company. He proved to be a devious business associate, by sending only part-payments for the shorts the Disney company was supplying him. Charles Mintz claimed that he was doing this because he was in a difficult cash-flow position himself; By the end of 1924, Charles seemed to have seen the light, offering $1800 for each of a further 18 Alice shorts. On the strength of this Walt hired two more of his old one-time Kansas City animators, Rudy Ising and Hugh Harman, and Roy married his long-time sweetheart, Edna Francis. Three months later Walt married Lillian Bounds, who had been working for him as an ink-and-painter, which proved to be an exceptionally fine and happy marriage. But the financial trobles continued for Walt with Mintz. At the end of 1926, it was clear to Walt that the Alice series (the title role now being played by Margie Gay) had been carried as far as it could be. (Of the 56 Alice Comedies, the first 16 were the only ones that made money.) Now, Mintz wanted a rabbit series instead of Alice, and Margaret Winkler suggested to Walt that this might be a good way of "losing" Alice while retaining the services of Disney. The result, of course, was Oswald, the Lucky Rabbit.
(Alice was also played by Dawn O'Day After Virginia Davis and before Margie Gay.)