BUT WHAT IS IT REALLY?
Unfortunately it's not what it seems - to me it looks quite obvious what it is.
You will notice throughout the scenes leading up to this one, where Dorothy and the Scarecrow are wandering around trying to get apples off the trees and free the Tin man, that you can see all sorts of birds wandering around including peacocks and other large birds.
The set designers working on The Wizard of Oz borrowed all types of birds off of the Los Angeles zoo to give the set a more realistic outdoorsy look. The shape that appears in the background is either a crane or an Australian native bird called a "Brolga" spreading its wings, and yes...it does seem a bit obvious now doesn't it.
The story of the Munchkin Suicide seems to have appeared in the late 1980's when The Wizard of Oz was re-released onto video celebrating its 50th anniversary, seems a good selling ploy doesn't it!
The story has never gone away and most people still believe it to this day and look for this scene. Its become one of the best known facts about the Wizard of Oz.
The forest scenes in the Wizard of Oz were filmed separate from the munchkin scenes, no munchkin's or "little people" were present during the filming of these forest scenes so there could have been no accidental munchkin hangings. MGM would also have never allowed such a clip to be accidentally included in a family film of The Wizard of Oz's caliber as any death on the set would have required a police investigation and report, the producers could have been liable for Manslaughter charges in court. It simply did not happen.

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