In a montage of George and Mary's passing years of life in Bedford Falls, Angel Joseph brings Clarence up to date. A devoted wife and mother, Mary first has a baby boy, and then a girl. She cares for the children and spends her days making the Granville house into a home, painting and wallpapering walls. George continues his daily struggle to keep the building and loan going, often returning home late after work. Sam Wainwright makes a fortune in plastic hoods for planes.
Potter becomes head of the draft board.
Mr. Gower and Uncle Billy sell war bonds. Ernie, Bert, and George's brother Harry go off to war. During the war effort, Harry is a navy fighter pilot whose heroics save a transport ship full of soldiers. George is rejected by the draft board as 4F due to his bad ear. He also leads the paper and scrap-rubber drives.