Victor Davis Hanson // National Review
In director Frank Capra’s 1946 holiday classic movie It’s a Wonderful Life, an initial bank panic sweeps the small town of Bedford Falls. Small passbook account holders rush to George Bailey’s family-owned Bailey Building and Loan to demand the right to cash out all of their deposits — a sudden run that would destroy the lending cooperative and its ability to issue mortgages or preserve the savings accounts of the small town.
The villain of the story, Henry F. Potter, who is a cash-laden, though miserly rival banker, played brilliantly by Lionel Barrymore, offers to buy up the depositors’ shares in the Building and Loan — but at a steep 50 percent discount.
Bailey (Jimmy Stewart) tries to explain to his panicked cooperative depositors the logic of their frenzy, with the exclamation, “Potter isn’t selling. Potter’s buying! And why? Because we’re panicky, and he’s not.”
Capra’s post–Depression era movie, even in its black-and-white morality, reminds us that, in crisis, the majority has limited liquidity and cash. And sooner rather than later they must sell assets — property, stocks, shares, and household goods — to operate their businesses or keep their homes until things pick up. In a real depression, those with the least cash fail first and in great numbers.
And the minority who do have cash are always willing to buy, even in a depression, albeit at their price, which is usually steeply discounted. Panic, not logic, eventually takes over the collective mind, as we now see with the downward spiral of the current stock market and the hoarding of goods otherwise in plentiful supply.
Discussion (4)
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I don't know you as a writer or lecturer and I feel I am missing out. I read the article on "The Logic of Pottersville" and was totally mesmerized by the amount of logic and common sense you have between those two ears of yours:>). It doesn't hurt that the film is one of my favorites and teaches the run on the bank lesson very clearly. Although most people watching the film would just try to enjoy it and forget the lesson. Not me and not you! I love things like that. Much like "The Big Short". I grew up in Chico, CA, so I know the hand to mouth lives of farmers. I am sorry your family lost their farm but I see the lesson was not lost on you. So in a painful way it did serve some purpose. I will order some reading by you when I get through what I have. This staying at home because of the virus has re sparked my reading books instead of the internet and I must say I am getting back into liking it again. It's been along time. I almost grew up in the library there in Chico. it was my second home. Anyway, thanks for the article. Stay well and safe. We need you to keep writing! Cheers! Mitch
As you may recall from the movie, during the run on the bank, George Bailey’s depositors knew him personally and admired him and his family. They trusted him, which allowed him to convince them to each take less than their entire account balances by paying each the lesser amounts that they said they immediately needed. Later, when Henry Potter again tried to break him by causing an examination of the building and loan after George’s aged uncle misplaced the building and loan’s cash receipts (which Potter found and illegally hid), his depositor friends, now almost the entire community, once more came to his aid with new money to keep the building and loan afloat. This is a good allegory for Trump as George Bailey, his building loan as the country, the Republican Senate as his friendly customers who provided him liquidity during the first run, the Democrat party as George Bailey’s nemesis Henry Potter who would stoop to anything including an unnecessary examination (impeachment) to damage George (Trump) and his building and loan if it will give Potter control over Bedford Falls, and finally the Bedford Falls community who loved George and came to his aid when Potter attacked him the second time are the American voters who will reelect Trump in 2020 after his great American victory over this virus.
Why does one now have to subscribe to review your writings on National Review?
Based upon some of the reports of medical supplies such as ventilators being shipped from the Midwest to New York and California, as well as the reclassification of industrial masks in the rust belt for use in affected cities, may I suggest a name and subject for your next piece:. "Deplorables to the Rescue!" Isn't there some irony in the mega centers of progressive group think reaching out to the great unwashed for assistance?