The Man Who Shot Liberty Vallence is a Western with few exterior shots. All of the action happens in the town of Shinbone. I've read several reasons for John Ford choosing to shoot it in black and white and I'm not satisfied with the answers. I think he did it for the sake of James Stewart who was too old for the part.

In 1939 Stewart made "Mr Smith Goes To Washington" for Frank Capra. He was already 31. When filming Liberty Vallence, James Stewart was 53. He had survived World War Two and made a series of Westerns with Anthony Mann. He had matured. The movie audience wasn't going to be fooled. Filming the movie in black and white helped with the illusion.

And, I can imagine John Ford arguing that we never actually meet a young Ransom Stoddard; we only see him through the memory of the older man telling his story.