Libertarians daydream about building private cities in the developing world. It will never happen, though, if they ignore real-world nightmares. Consider the biggest, baddest failure of private government: Fordlandia.

In 1927, the American industrialist Henry Ford began building a private city—Fordlandia—in the depths of the Brazilian Amazon forest. His company had won title to nearly 2.5 million acres of land—over 3,800 square miles—for a planned rubber plantation and company town. Ford spent over $20 million (about $300 million in today’s dollars) putting in roads, water and power systems, rail lines, factories, offices, medical facilities, homes, schools, and stores.
Drawn by the prospect of good jobs and modern living, thousands of workers and their families flocked to Fordlandia. Soon, however, waves of rioting, looting, and burning roiled the city. Ford abandoned his namesake in 1945, leaving it to rot in the jungle. 


Why did Fordlandia end in failure?  
Perhaps because it was born in hubris. Its founding genius ranked as the richest man in 1920s America. He made his fortune founding and running the Ford Motor Company, one of the world’s largest and most profitable firms. But Henry Ford cared about more than making cars and money. He wanted to make a new kind of worker.
Ford’s mass production assembly lines needed regimented, reliable employees. Ford got them by paying nearly double the prevailing wage and by subjecting his workers to the oversight of Ford Motor Company’s own sociology department, which directed workers’ personal hygiene, household management, and off-hours recreation. 
Ford exercised still more control over workers who lived in the Ford Motor Company towns built across the upper Midwest to harvest timber from the company’s huge and remote forests. Henry Ford took a detailed interest in the company towns, dictating what workers should plant in their front yards and what dance steps their children should learn at school.
Ford longed for a larger canvas, however. He worked up plans to build a 75-mile-long city along an impoverished stretch of the Tennessee River, but federal lawmakers balked at the notion. Perhaps Ford would have fared better if he had not announced his intention to create a regional “energy dollar” backed by the power of his dams. Instead, the federal Tennessee Valley Authority took charge of the region’s rivers. Frustrated at home, Ford looked abroad.
Fordlandia was born of Ford Motor Company’s need for vast amounts of rubber—not just for the Model T’s tires but for gaskets, hoses, wires, and other parts. Ford Motor Company began worrying about rubber during the 1920s, when it found itself relying on plantations located in Europe’s Southeast Asian colonies. (Commercially viable alternatives to natural rubber had not yet been invented.) Rising prices and political uncertainty convinced Ford to find—or rather, make—another source of rubber. Just as the Ford Motor Company got wood from its own forests, it would get rubber from its own plantation. And just as it built towns for timber workers and their families, Ford would build an entire city to support its rubber plantation.

Poor Planning

Fordlandia ultimately failed because its rubber trees failed. Though native to the region, Hevea brasiliensis trees do not grow together in the wild. Packing them into a plantation made them easy prey for local diseases and pests. Plantations might work in Southeast Asia, where rubber trees had no natural enemies, but they seemed doomed to fail in Fordlandia.
In that, alone, we see one big cause of Fordlandia’s failure: poor planning. Remarkably for so large and successful a company, the Ford Motor Company did not excel in working things out beforehand. The aviator Charles Lindberg, who worked with the company’s aviation division, explained, “Their policy is to act first and plan afterward, usually overlooking completely essential details.”
Ford distrusted experts. He staffed the Fordlandia project with capable men and expected them to work out the details by simple common sense and elbow grease. “Learning by doing” was a both a Ford management philosophy and a core principal of the pedagogy Ford impressed on the many schools he ran.
Fordlandia thus launched without anyone bothering to figure out what made Southeast Asian rubber plantations work—or what might make a Brazilian rubber plantation fail. And while the Ford Motor Company knew something about building and running company towns, it evidently never thought to consult with the United Fruit Company, which ran thriving company towns in neighboring regions. Ford would have to learn for himself how to deal with a foreign culture and a foreign government.
Consistent with his disdain for experts, Ford did not ask qualified attorneys to iron out the details of his agreement with Brazilian officials. On paper, Ford’s negotiators won wide-ranging concessions: millions of acres of public lands; the right to exploit natural resources, construct buildings, railroads, and airfields, organize a private police force, and run schools; and exemptions from export taxes and import duties. Ford had no effective way to enforce those promises, however, when later political administrations found them inconvenient.
Logistical difficulties hobbled Fordlandia from the start. It was not simply a problem of remoteness—though the Amazon jungle proved remote indeed from Detroit. Nobody noticed until it was too late that the only effective way to reach Fordlandia—the Tapajos river, which ran through the property—grew too shallow during the dry season to allow passage of any but the smallest ships. A freighter sent from Detroit full of supplies necessary for getting Fordlandia started had to wait four months for the river to rise. When the freighter finally reached the work site, Ford workers discovered that the cranes needed to unload heavy cargo had been packed first, putting them at the bottom of the ship’s hold.
Those and other logistical mistakes left Ford officials unable to provide workers with adequate food, decent housing, or gasoline for power tools. Clearing the jungle by hand proved grueling and often deadly work. Workers fell prey to biting insects, poisonous snakes, scorpions, exhaustion, and illness. After one too many meals of rotten meat, they rioted, arming themselves with machetes and putting the Americans to flight.
Although Ford officials restored calm in that instance, later maltreatment of workers—including strident programs to clean up residential areas and futile attempts to impose prohibition—triggered worse outbreaks of violence. In the last of them, rampaging workers set fire to Fordlandia as they chanted, “Brazil for Brazilians!  Kill all the Americans!” Ford officials had to call in the Brazilian army to restore order.
Fordlandia struggled on for some years but never came close to turning a profit. The Great Depression made business of any sort difficult, much less a business plagued with dying trees and rioting workers. Ford finally called the experiment off in 1945, surrendering Fordlandia to the Brazilian government for merely $244,200—the amount owed to laid-off workers under Brazilian law.
People frustrated with the foibles of statism have often advocated private government. Ayn Rand imagined Galt’s Gulch, Robert Nozick called for a “utopia of utopias,” and Randy E. Barnett describes how competing companies could create a polycentric legal order.
It’s not just talk, either. As I discussed in my prior column, reformers in Honduras have been working on plans for private developers to build special development regions that would enjoy considerable autonomy from the central government. (Things have been looking up since my last report, but that’s a subject for another column.)
Little good will come of daydreaming about private governments, however, unless we face up to the possible nightmares. The history of Fordlandia offers valuable lessons in how not to build and run a city. It remains for us to learn from Ford’s mistakes and do better.
For further reading:
Greg Grandin, Fordlandia: The Rise and Fall of Henry Ford’s Forgotten Jungle City (New York: Metropolitan Books, 2009).
Find a Portuguese translation of this article here.
Tom W. Bell

Tom W. Bell is a professor at Chapman University School of Law.