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I just watched The Great Silence (orig.: Il grande silenzio) and I have to say, I was utterly perplexed by its ending. At the end of the movie Loco invades Snow Hill with his friends and they take the supposed bandits from the mountain hostage in order to lure Silence out for a confrontation. And indeed Silence comes to them, but before he can do anything, he's shot and ultimately killed by Loco. In fact everybody's killed, the mountain people are executed without defense, Pauline is shot and dies over Silence's dead body. And then Loco just takes Silence's gun and he and his men go their ways, without the slightest scratch, possibly even sacking the bounty for the mountain "bandits".

But what on earth are we to make of this ending? Now I don't want to make this question sound too opinion-based, but while it is not uncommon to see the hero die at the end or to not see everything pan out perfectly for everyone, this ending was such a stark contrast, at some point I just couldn't believe my eyes anymore. This wasn't just not a happy ending, it was the "unhappiest" ending one could imagine. So I'd like to ask what the filmmakers intended to say with this. What was the reason or message behind this incredibly dismal ending? And was this changed at some point and are there (maybe even released) alternative endings or was this always the intended ending?

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These questions are answered actually pretty well on the Wikipedia article for the movie. The thematic analysis is really well written and paints the movie as an allegory for capitalism and big banking preying on the poor.

Without getting into too much of it, I'll address each of the specific questions you mention. The thematic analysis is pretty long to paste the entire thing here but I've included the final paragraph. The short answer is that the movie is meant to be a political allegory.

What was the reason or message behind this incredibly dismal ending?

From the first and last paragraphs of the thematic analysis from wikipedia*

Corbucci, a left-wing radical who made his political views either the subtext or subject of several of his films, wrote the film’s story as an allegory highlighting the corruptions that can be caused by capitalism and authoritarianism, which are personified by the sadistic, greedy bounty killers led by Loco (who use the bounties to fuel their desires for violence and money while acting under the law), as well as the schemes of the banker Pollicutt.

...

The deaths of Silence, Pauline and the outlaws at the hands of Loco and his gang are a culmination of the subversive elements of The Great Silence and its anti-authoritarian stance. The deaths of sympathetic characters were nothing new for Corbucci – he had previously allowed the title character of his first Western, Minnesota Clay, to be killed off. However, the political context of his later film made plays a major factor in the presentation of its thematic concerns. According to Alex Cox, a major proponent of Corbucci’s films, “Corbucci’s widow, Nori, told [producer] Katsumi Ishikuma that her husband had the deaths of Che Guevera and Malcom X in mind when he conceived The Great Silence... For the radical, for the revolutionary, both deaths were terrible news. You could only take on the powerful and the wicked for a short while, it seemed, before they crushed you.” In contrast to the deaths of leading characters in similarly progressive films of the time, such of Ben, Duane Jones’ character in Night of the Living Dead, and Dennis Hopper and Peter Fonda in Easy Rider, in which said characters are killed by similarly disenfranchised groups, the bounty killers are working as part of the State, acting in the service of capital by helping to protect it. What further separates the deaths of the heroes and the anti-authoritarian position of The Great Silence from Romero and Hopper’s films is that, unlike Night of the Living Dead and Easy Rider, which were produced without the restrictions of well-established genre conventions, Corbucci’s film also subverts and comments on the genre that it is part of. Cox believes that the moral message of the film is that "sometimes, even though you know you'll fail, you still do the right thing." He also adds that by facing an unbeatable foe and dying in the ensuring duel, Silence "becomes the noblest hero of any Western film since Shane."

Emphasis mine

And was this changed at some point and are there (maybe even released) alternative endings or was this always the intended ending?

There was an alternate ending filmed that Corbucci was apparently forced to make by the studio in order to show the film in certain markets, but the bleak ending was the original ending and the one Corbucci intended.

From wikipedia article on alternate ending

Due to the bleak nature of the original finale, Corbucci was forced to shoot an alternative "happy" ending to the film for the North African market, where Spaghetti Westerns were popular, but had to have an upbeat conclusion. Some of the footage shot for this ending appeared in the film's Italian trailer, despite it not appearing in that release of the film. Because it was believed that no audio elements for this ending had survived, early DVD releases of the film, such as the US release from Fantoma Films, feature it without sound. However, a version with Italian dubbing has surfaced in recent years, and has been translated into English by members of the Spaghetti Western Database fansite.

In this ending, Loco draws his gun without waiting to be prompted by Silence. Suddenly, Burnett, having somehow survived being trapped under the frozen lake, rides into town on horseback and shoots Loco in the head, giving Silence enough time to kill the remaining bounty killers. Burnett frees the outlaws as Pauline takes the bandages on Silence's burnt right hand off, revealing a gauntlet that he used for protection. As Burnett takes the thieves to the local jail to await their amnesty, he asks Silence to become his deputy, which he accepts with a smile. Reunited as a romantic couple, Silence and Pauline see Burnett and the outlaws off.

Emphasis mine

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