On Christmas Eve 1945, in Bedford Falls, New York, 38-year-old George Bailey contemplates suicide. The prayers of his family and friends reach heaven, where Angel 2nd class Clarence Odbody is assigned to save George, to earn his wings. Clarence views flashbacks of George's life: In 1919, 12-year-old George saves his brother Harry from drowning, losing the hearing in his left ear. George prevents the druggist, Mr. Gower, from accidentally poisoning a prescription.
In 1928, George plans to tour the world before college, and is reintroduced to Mary Hatch, who has long had a crush on him. When his father suffers a stroke and dies, George postpones his travel to sort out the family business, Bailey Brothers' Building and Loan, which boardmember Henry F. Potter wishes to dissolve, but the board votes to keep it open, provided that George runs it. Giving his college tuition to Harry on the condition that Harry take over the Building and Loan when he graduates, George works alongside his uncle Billy.
Four years later, a married Harry returns from college, ready to honor his commitment, but George will not let him turn down an excellent job offer from his father-in-law. George marries Mary. They witness a run on the bank and use their $2,000 honeymoon savings (equivalent to $40,000 in 2019[8]) to keep the Building and Loan solvent.
George establishes Bailey Park, a housing development financed by the Building and Loan, in contrast to Potter's overpriced slums. Potter offers George $20,000 a year (equivalent to $280,000 in 2019[8]) to become his assistant, but George realizes Potter intends to shut down the Building and Loan and rebukes him.
During World War II, George is ineligible for service because of his deaf ear. Harry becomes a Navy pilot and earns the Medal of Honor by shooting down a kamikaze plane headed for a troop transport. On Christmas Eve 1945, as the town prepares a hero's welcome for Harry, Billy goes to deposit $8,000 (equivalent to $110,000 in 2019[8]) of the Building and Loan's cash. At the bank, Billy taunts Potter with a newspaper headline about Harry, but unintentionally wraps the envelope of cash in Potter�s newspaper. Billy discovers he has misplaced the cash, and Potter finds the envelope but says nothing. When a bank examiner reviews the Building and Loan's records, George realizes scandal and criminal charges will follow. Fruitlessly retracing Billy's steps, George berates him, and takes out his frustration on his family.
