Author Philip Van Doren Stern was inspired by a dream to write the story that would be eventually adapted into the holiday classic It's a Wonderful Life. Because he could not initially find a publisher for the story, titled "The Greatest Gift", Stern sent 200 copies of the story to friends and colleagues as a holiday gift in 1943. One of the copies made it's way to David Hempstead, a producer at RKO Pictures. The studio purchased the movie rights as a vehicle for Cary grant but couldn't get project off the ground and eventually sold the rights to Frank Capra for $10,000.
When Capra bought the film rights he also inherited the script that RKO had originally commissed. Capra hired Frank Goodrich and Frances Hackett to make adjustments, but tensions between the collaborators caused the screenwriters to quit before completing the project. Other notable script doctors were also brought in, including Dorothy Parker.
Jimmy Stewart served as a pilot in WWII and had difficulty with the stress of combat. He was grounded after his final flight in February 1945. Reports indicate that he suffered from what we would now call PTSD. Stewart biographer Robert Matzen reports:"the guys that flew with him, who told me about the fact that he went flak-happy on a couple of occasions — which means shell shock, battle fatigue, what we now know as PTSD. He wasn't afraid of bombs or bullets. He was afraid of making a mistake and causing someone to die. That was his endless stress, and that's what ended up grounding him."
Stewart was reluctant to take the role, but had no offers. Capra was relieved that he took the job affter an awkward and failed first meeting about the film.
Stewart largely hid his struggles on set, but continued to discover the effects the war had on his body and mind. From Robert Matzen: "...he[was] still having nightmares and the shakes and the sweats. He [had] some hearing loss now, from the sound of the bombers on those seven-, eight-hour missions. So now you have an actor who, it's not easy for him to hear his cues."
From an interview with Stewart biographer Robert Matzen in the Chicago Tribune::
"Capra had supreme confidence in this story. Stewart not so much, but he got on board with it. It was this sense of, "This is our last shot. Hollywood went on without us, we're not getting any younger, and if this bombs after we've both been away for five years …"
But if you watch that performance by Stewart, there was a lot of rage in it and it's an on-the-edge performance because that's what those guys were feeling — they were scared that this wasn't going to work. That the audience wasn't going to buy it. Donna Reed (playing Stewart's wife in the film) is one of the eyewitnesses who said, "This was not a happy set." These guys were very tense. They would go off and huddle say, "Should we try this? Should we try that?" And it proceeded that way for months.
They started shooting at the beginning of '46 and it was a long shoot, it went into June. It was a very expensive, exhaustive production. It cost $3 million to make the thing."
The film tanked at the box office, falling short of recouping it's investment by $525,000. Critics did not give it a much-needed boost, but the film did earn five nominations at the Oscars that year, including Best Picture, Best Actor (Jimmy Stewart), and Best Director. Unfortunately it lost out on all five awards -- mostly to the contender The Best Years of Our Lives.
Because of the film's box office failures, the studio allowed the copyright to lapse in the early 1970s. Because networks could screen the film for free, it became a holiday mainstay and garnered the lifelong fans that still enjoy it.
From Name Above the Title: An Autobiography:
But I didn't give a film-clip whether critics hailed or hooted Wonderful Life. I thought it was the greatest film I had ever made. Better yet, I thought it was the greatest film anybody ever made. It wasn't made for the oh-so-bored critics, or the oh-so-jaded literati. It was my kind of film for my kind of people; the motion picture I had wanted to make since I first peered into a movie camera's eyepiece in that San Francisco Jewish gymnasium.
A film to tell the weary, the disheartened, and the disillusioned; the wino, the junkie, the prostitute; those behind prison walls and those behind Iron Curtains, that no man is a failure!
To show those born slow of foot or slow of mind, those oldest sisters condemned to spinsterhood, and those oldest sons condemned to unschooled toil, that each man's life touches so many other lives. And that if he isn't around it would leave an awful hole.
A film that said to the downtrodden, the pushed-around, the pauper, "Heads up, fella. No man is poor who has one friend. Three friends and you're filthy rich."
A film that expressed its love for the homeless and the loveless; for her whose cross is heavy and him whose touch is ashes; for the Magdalenes stoned by hypocrites and the afflicted Lazaruses with only dogs to lick their sores.
I wanted it to shout to the abandoned grandfathers staring vacantly in nursing homes, to the always-interviewed but seldom-adopted half-breed orphans, to the paupers who refuse to die while medical vultures wait to snatch their hearts and livers, and to those who take cobalt treatments and—I wanted to shout, "You are the salt of the earth. And It's a Wonderful Life is my memorial to you!"