It is common knowledge that Columbia studio boss, Harry Cohn, was dissatisfied with the original ending of Lost Horizon and forced Frank Capra to reshoot the final scene in a way that the director and his screenwriter, Robert Riskin, both intensely disliked. 
The original ending had been seen in the three-hour version of the film, tested at the disastrous Santa Barbara preview on November 22, 1936.  It apparently ended as had Robert Riskin's screenplay in which the final scene, bringing Conway (Ronald Colman) full circle, appears as follows: 
EXT. SOMEWHERE IN TIBET - NIGHT
MOVING IN FRONT OF CONWAY - as he walks forward with a steady step - his head held high - his eyes sparkling - snow pelting his face.
353. LONG SHOT
Over his silhouetted back.
As he walks away from the CAMERA, and we STAY WITH HIM a long time as he approaches a hill.
ANOTHER LONG SHOT
He has now ascended to the middle of the steep hill - his gait unchanged. THE CAMERA PANS UP to the summit of the incline - and we see that beyond it the horizon is filled with a strange warm light. Conway's figure - in silhouette - disappears over the hill - bells ring - and as the music begins to swell.
According to one commentator: "That was deemed too indefinite a finale for a film with such doubtful box-office prospects." 
The ending Harry Cohn subsequently required of Capra, and which was shot on January 12, 1937, is fortunately included in the bonus material on the Lost Horizon DVD. Here the snow-pelted Conway is sighted in the distance by Sondra (Jane Wyatt), his love-interest in Shangri-La, as she stands at the railed mountain pass the viewer had recently seen in the same scale when Conway bade his wordless farewell to the Valley of the Blue Moon.  This second ending consists of the following shots:
- Medium shot of Sondra standing at the railed mountain pass, with the lamasery visible in the distance behind her. Suddenly she seems to notice something.
- Long shot of Conway making his way over a snow-covered mountain.
- Close shot of Sondra, who joyously waves, calling out "Bob."
- Medium shot of Conway looking up and waving back.
- Medium shot of Sondra, as two Tibetans join her from behind, and Sondra says to them: "It is he. It's Mr. Conway. Go, tell Chang." They hurry away.
- Close-up of Conway.
- Close-shot of Sondra, waving and calling out: "Bob, Bob," then rushing out of frame.
These seven shots are followed by a montage sequence which includes bells ringing in a steeple, the façade of the lamasery and the words "The End." This was the ending on the prints of the film seen in major U.S. cities during the first half of March 1937.
Capra and Riskin finally prevailed on Harry Cohn, obtaining his acceptance that a new ending be cut on the basis of existing footage. This third ending, followed by the same bell montage as in the previous one, consists of four shots and is the one audiences have seen since the middle of March 1937:
- Long shot of Conway, making his way over a wind-swept glacier.
- Medium shot of Conway, leaning on an ice axe and looking up at something (off-screen) that has caught his eye.
- Conway's p.o.v.: the familiar stone archway with its wooden railing and the lamasery visible in the background.
- Close shot of Conway who visibly reacts to what he sees, finally breaking into a smile.
The three endings might be summarized schematically as follows:
chronology distinguishing features 1 Original ending, following Riskin's screenplay and shown at Santa Barbara Preview, November 22, 1936. A strange warm light fills the horizon beyond a snow-covered hill as Conway disappears behind its summit. 2 Ending imposed by Harry Cohn and shown at the film's opening engagements during the first half of March 1937. Sondra, watching from the railed mountain pass, sees Conway crossing a snow-covered hill, calls out his name and waves to him; he waves back. After dispatching two tribesmen to tell Chang that Conway has returned, she again calls out his name and rushes out of frame. 3 Final ending, wanted by Capra and Riskin and used since the middle of March, 1937. Crossing a snow-covered hill, Conway looks up and sees the railed mountain pass with the lamasery visible beyond it.
The final scene, in its definitive version, has been interpreted in two very different ways in commentaries on the film.
One is straightforward and takes at face value the classic point-of-view figure used in the scene. This figure begins with a lead-in of Conway looking at something off-camera (Shot 2); proceeds to a shot showing what he sees - the railed mountain pass, with the lamasery visible in the distance (Shot 3); and concludes with a follow-up of Conway still in the act of looking, thereby confirming that it was through his eyes we have just been seeing (Shot 4). Commentators who understand the scene in this way take the ending to show that Conway succeeds in his quest for Shangri-La.  The joyous bell montage and swelling music that then close the film would be consistent with this interpretation.
The other view is that the ending is ambiguous, as suggested for example in the spoken commentary on the Columbia DVD, in which Robert Gitt compares the definitive ending, fought for by Capra and Riskin, to the one that had been imposed by Harry Cohn:
… the ending that Capra wanted […] is more ambiguous and much better I think because we hope that [Conway] got back to Shangri-La - maybe he did, maybe he didn't but we hope he did. I think it leaves it up in the air, which is very nice.
Understanding the final scene in this way would logically require that the point-of-view shot (of the mountain pass and lamasery) somehow be invalidated, as was argued by Leland Poague in the following terms:
It is commonly assumed that Conway reaches Shangri-La in the film's last moments, or at least has reached a point where the entrance to the valley is in view- as indicated by an editing trope (Conway glancing off, followed by a shot of the railed archway seen earlier) commonly understood as representing a character's gaze and its object. However, when Conway experiences this vision, he is depicted as standing on a glacier […] Even if we assume that Conway knows where he is, is near in fact to Shangri-La, however, there is no way of taking the point-of-view shot here (as it were) literally given its represented dimension […] Any nearby glacier would be far below the archway entrance; Conway's "view" of the archway must be taken (at best) as a memory sparked by proximity. […] the Shangri-La Conway "sees" in this last shot is, as if literally, his shadow, his projection, a memory that always walks on before him. 
According to Poague, it is the scale of the shot that shows that the mountain pass isn't really there. And that in turn means that Conway may or may not be anywhere near Shangri-La.
Poague's position might be challenged in a number of ways.
First, on the grounds that a more likely explanation for the scale of the shot is that the viewer had to be able to recognize the familiar landmark and could not do so (or believe that Conway could do so) if the mountain pass were a mere dot in the distance, and no glimpse were afforded of the lamasery framed by the stone archway.
Second, because scale alone - especially when the dimensions in play are ones that are familiar to the viewer - is a poor signal for indicating that something isn't truly there. Had it been Capra's intention to leave the ending open, he could have done so far more appropriately and effectively in other ways. And the scale of these shots is essentially the same as that in the Cohn-imposed ending described above. Surely no one would suggest that both Sondra and Conway are hallucinating as they wave to one another in medium shots; and if they aren't delusional, then why shouldn't the scale argument apply to that ending as well?
Third, if Conway hasn't found his way back to Shangri-La, then why should the lamasery bells peal joyously to triumphant music immediately after the final scene?
The conclusion of the James Hilton novel Lost Horizon (1933) is open, ending as it does with an unanswered question about Conway's desperate quest for Shangri-La: "Do you think he'll ever find it?"  Despite occasional claims to the contrary, the ending of Frank Capra's Lost Horizon answers that question clearly and unequivocally.---------
1 See for example Joseph McBride, Frank Capra. The Catastrophe of Success (London & Boston: Faber and Faber, 1992), p. 364. A more detailed discussion can be found in Robert Gitt's spoken commentary on the bonus material segment called "Alternate ending" on the DVD issued by Columbia Pictures in 1999.
2 Capra himself described the preview in these terms: "The Santa Barbara audience sat quietly through the first ten minutes of the film. Then-it began to titter, where no titters were intended. The titters swelled into laughs, where no laughs were intended." Frank Capra, The Name Above the Title (New York: Macmillan, 1971), p. 199. Elsewhere he said of the preview: "It was an absolute disaster, an unreleasable film." Directing the Film. Film Directors on Their Art, edited by Eric Sherman (Los Angeles: Acrobat Books, 1988), p. 265.
3 The entire screenplay is currently accessible at http://www.dailyscript.com/scripts/Lost_Horizon.html
4 McBride, op. cit., p. 364.
5 "Conway hesitates at the [mountain] opening, looks back one more time. His eyes show confusion and defeat." Scene 303 in Riskin's script.
6 For example, McBride wrote "The final ending […] showed Conway looking toward Shangri-La" (ibid.). And according to Rudy Behlmer, "Conway is seen trudging through the snowy mountains until he suddenly sees the entrance to the lamasery." America's Favorite Movies: Behind the Scenes (New York: Unger, 1982), p. 34.
7 Another Frank Capra (Cambridge: Cambridge University Press. 1994), pp. 151-152.
8 James Hilton, Lost Horizon (New York: Grosset & Dunlap, 1933), p. 277. The nameless first-person narrator asks this question of Rutherford (corresponding to the Gainsford character of the film), who had been tracking Conway.
Behlmer, Rudy. America's Favorite Movies: Behind the Scenes. New York: Unger, 1982.
Capra, Frank. The Name Above the Title. New York: Macmillan, 1971.
Gitt, Robert. "Alternate ending," Lost Horizon DVD, Columbia Pictures, 1999.
Hilton, James. Lost Horizon. New York: Grosset & Dunlap, 1933.
McBride, Joseph. Frank Capra. The Catastrophe of Success. London & Boston: Faber and Faber, 1992,
Poague, Leland. Another Frank Capra. Cambridge: Cambridge University Press. 1994.
Riskin, Robert. Lost Horizon. Screenplay. http://www.dailyscript.com/scripts/Lost_Horizon.html
Sherman, Eric (ed.). Directing the Film. Film Directors on Their Art. Los Angeles: Acrobat Books, 1988.
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