It may have become a holiday classic but Jimmy Stewart’s It’s a Wonderful Life initially slumped at the box office in 1946, reportedly landing director Frank Capra $25,000 in debt, and drawing the ire of the FBI who considered the film subversive. 

Despite the box office take, Capra considered It’s a Wonderful Life to be his finest work and screened it for his family every year during the holiday season. Hollywood star Jimmy Stewart called it his favorite movie and the Library of Congress designated it as "culturally, historically or aesthetically significant" in 1990. 

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The FBI found a 'malignant undercurrent' in It's a Wonderful Life

While the Bureau found the movie ‘entertaining’, an FBI agent identified a ‘malignant undercurrent’, according to scholar John A. Noakes and FBI notes. Further scrutiny concluded “those responsible for making It’s a Wonderful Life had employed two common tricks used by Communists to inject propaganda into the film.”

The ‘tricks’ supposedly involved smearing “values or institutions judged to be particularly American” (a stingy capitalist banker, Mr. Potter) and glorifying “values or institutions judged to be particularly anti-American or pro-Communist” (the economic depression and an existential crisis) that the FBI considered a “subtle attempt to magnify the problems of the so-called ‘common man’ in society”.

The FBI notes that at least one critic viewed the film as deliberately maligning’ the upper class and “attempting to show the people who had money were mean and despicable characters”.

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The Hollywood 'Red Scare'

The FBI's review of It's a Wonderful Life was part of a formal surveillance operation targeting the motion picture industry that began in August 1942 and continued for 16 years, writes Noakes, a sociology professor and author of Using FBI Files for Historical Sociology.

The movie was previewed at New York’s Globe Theater on December 20, 1946, a period post-WWII when the ‘Red Scare’ of communism was palpable. The FBI wasn’t alone in thinking communists were marching in through the back door during Hollywood’s Cold War. 

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The FBI's search for subversive movies

Dozens of movie stars - Clarke Gable and Ginger Rogers among them - joined the right-wing Motion Picture Alliance for the Preservation of American Ideals formed in 1944, a political action group that advised film producers how to avoid ‘subtle communistic touches’. Alliance members assisted the FBI in its search for subversive movies although their Hollywood opponents saw the group more as red-baiting and anti-unionist. 

It’s a Wonderful Life also stars Donna Reed and Lionel Barrymore. The American Film Institute voted it the ‘most inspirational film of all time’. Life magazine considered it a "masterful edifice of comedy and sentiment" although a New York Times critic found it "a bit too sticky for our tastes". 

It’s a Wonderful Life was nominated for five Oscars including Best Picture but Capra and his team went home empty-handed.