This paper analyzes the depiction of the American Dream in the films of immigrant filmmaker Frank Capra, particularly “Mr. Smith Goes to Washington” (1939) and “It’s a Wonderful Life” (1946). Capra depicts a nation in crisis in contrast to the idealized vision of the “American Dream” by contrasting it with the harsh realities faced by ordinary citizens, as seen through his protagonists, Jefferson Smith and George Bailey. Building upon the work of historian Charles R. Hearn, who initially foregrounded the ways that the Great Depression stifled this promise of prosperity, this paper shows how Capra’s not-so-sunny vision of American life reflected 20th-century realities. Further, I elaborate upon historian Peter Feuerherd’s assertion that Capra subverted the idealized narrative of this dream, among others, by demonstrating precisely how this was so by examining the economic struggles of the protagonist Bailey, a small bank manager. Central to the presented argument is that Capra uses the outsider perspective to highlight the contradictions within American politics and society. Through this lens of the Great Depression and its aftermath, I consider how both films offer a commentary of the political and economic systems that promised prosperity in the early 20th century but often failed to deliver. In “Mr. Smith,” Capra critiques the corruption of political institutions and breakdown of democratic ideals, portraying the struggle of the everyman. This theme resonates with modern distrust in government. Similarly, in “It’s a Wonderful Life,” Capra presents a more personal reflection on the American Dream, exploring the economic struggles of the collapse of the traditional family business in the face of corporate greed. These films paint nuanced scenarios of American capitalism and politics while providing messages of perseverance and community.