Almost 15 years ago, in the heat of the Amazon jungle that has daunted lesser visionaries, American shipping magnate Daniel K. Ludwig imagined growing trees like corn on a tract the size of Connecticut.
Today, after an investment of nearly $1 billion and no profit yet in sight, it appears that the Brazilian jungle has proven stronger than the dollar. The tract, called Jari, is up for sale.
Disillusioned and in poor health at 83 years, Ludwig is dismantling the world's largest private landholding. Accustomed to visiting Jari every two months, Ludwig has not traveled to his Amazon estate in almost a year.
In that year, Ludwig's administrators have cut Jari's work force in half from a peak of 7,346.Determined to balance the books of the Amazon's largest employer, the directors have reduced Jari's engineering division from 1,400 to 100, and have pared the forestry research department from 50 to 13.
Visitors report that the planting of new pine trees and the pruning of existing melina trees -- which were the great hope of the project -- have been suspended, allowing jungle undergrowth to creep into the forest plantations.
Jari's herd of 6,000 water buffalo, said to be the world's largest, is being sold or slaughtered. A recently completed village of 375 houses now stands abandoned in a forest clearing because Jari directors decided they cannot afford to supply power to the $4 million settlement.
"We invested to build a truck and now we've made a [Volkswagen] beetle," Johan Zweede, the forestry director, complained recently to a Brazilian reporter.
In the past, Ludwig's singlemindedness and vision brought him one of the world's largest supertanker fleets. In the Amazon, this approach, coupled with seemingly limitless funds, has reduced Ludwig -- once reputedly America's richest man -- from a billionaire to millionaire.
From Japan, where Ludwig built his supertankers, he floated a 17-story pulp mill around the world and 300 miles up the Amazon River to Jari. Powered by an imported wood-burning power plant, this computerized mill now produces daily 750 tons of bleached pulp for paper making.
Turning to the jungle, Ludwig's loggers cut down and burned millions of tons of original forest, provoking thunderstorms miles away. On the cleared land, workers planted 120 million trees in 13 years and linked the plantations with a 50-mile woodburning railroad and 3,000 miles of red-dirt access roads.
By accident, Ludwig discovered that his land held 50 million metric tons of kaolin, a fine white clay in high demand today to coat magazine paper for color printing. His kaolin mine and mill now produce 190,000 tons a year.
Turning to the river, Ludwig diked and bulldozed the Amazonian floodplain to create 10,000 acres of rice paddies. Until recently, planes flew as many as 200 flights a day, seeding rice and spraying against insects.
Jari has come a long way since Ludwig's overnight visit in 1967, when jungle noises kept him awake until 4 a.m. Today, freighters of up to 40,000 tons steam up the Jari River to fill their holds with containers of kaolin and cellulose for the United States and Europe. Twenty-four hours a day, plumes of steam rise from the riverside pulp mill -- fed by forklifts capable of scooping up 60 tons of logs at a time.
Monte Dourado, the largest of Jari's six towns, has the air of an Amazonian Levittown, a mosaic of 1,500 single-story ranch houses supplied by supermarkets selling everything from hammocks to color television. On Saturday nights, the American community frequently gathers for square dances. On Sunday mornings, the parking lot of Jari's Ecumenical Church fills with jeeps, pickups and air-conditioned American sedans.
Despite these Pharaonic achievements, Jari has yet to make money. Last year, on an operating budget of $250 million, the project lost $80 million. Reportedly, Ludwig is now bedridden for most of the day in his New York apartment, and friends and foes agree that he will never see his investment returned.
In the 1950s, Ludwig accurately forecast a worldwide communications explosion that would create paper shortages in the 1980s. Accordingly, the entrepreneur gambled heavily on the melina, a fast-growing tree from India that he hoped would shoot up 18 feet in a year. For a tropical greenhouse, Ludwig paid 75 cents an acre for Jari's 5,600 square miles -- in an area where it rains 100 inches a year.
But the Amazon is often described as "a counterfeit paradise," a thick, lush canopy covering thin, nutrient-poor soil. Ludwig neglected soil tests and today his directors find disappointing yields for the imported tree: 75 percent below expectations on the sandy soils, 40 percent below expectations on the clay soils. The melina fields are being torn out and replaced with eucalyptus and Caribbean pine, but the pulp mill now faces a five-year shortage.
Despite two harvests per year, the energy-intensive rice project is also losing about $9 million annually. Critics say that seeding rice by airplane and harvesting crops by combine is a waste of money in Brazil where labor is plentiful and cheap. Rice yields are 30 percent below expected, and Ludwig is offering partnership in the project to Atlantic Richfield.
A stable government was one of Ludwig's criteria in the early 1960s when he dispatched scouts to find land for his food and pulp experiment. In 1967, they found Jari, which met his other demands: a tropical forest and flood plain, with access to the sea. That year, Ludwig met for one hour with Brazilian president Humberto Castello Branco, a general who three years earlier had led a coup.
Impressed by his warm welcome, Ludwig brought Jari two days later for $3 million from four Portuguese owners. Jari could not be duplicated in Brazil today. Four years after Ludwig bought his Amazonian estate, the government passed a law restricting individual foreigners to owning a maximum of 16 percent of a municipality.
Jari is subject to Brazilian forestry law, which requires that he preserve one half of his jungle as natural forest. Jari officials estimate that only 5 percent of Jari has been cleared and replanted.
Jari's former diretors blame many of the projects' setbacks on Ludwig and his conflicting orders and erratic style of management. Since groundbreaking in 1967, Jari has gone through two dozen directors and four dozen sector heads.
But, in a letter last August to Golbery do Couto e Silva, chief of staff for Brazil's president, Ludwig blamed many of his problems on an allegedly hostile Brazilian bureaucracy.
In the letter, the American magnate noted that he had installed -- without government aid -- houses, hospitals, schools, sewers, supermarkets, electricity, telephones and piped water for 30,000 people, plus four airports and two ports.
In return, Ludwig complained, the government withheld an import license for a newsprint plant, denied permission to build a 1,000-megawatt hydroelectric plant, and refused to regularize his land titles, charging that he owned 25 percent less land than he claims.
Unless the red tape is cut, Ludwig wrote, "our situation is hopeless . . . I would have to do everything possible to save some part of my investment" -- a threat he is now carrying out.
In a measure of how Ludwig's once friendly relations with the Brazilian government have soured, one minister reacted to the letter saying the tycoon's lack of resources "is his problem and warning, "The government doesn't work under pressure -- he made the project as his own risk."
In November, when Ludwig planned to sell to Alcoa an Amazonian holding of 500 million tons of bauxite, the government suspended the sale. In December, when Jari loggers cut hundreds of trees in an area of disputed ownership, Army troops stopped the workers, and the tree trunks were left to rot.
"I am going to uncork a bottle of champagne when Jari is sold," commented Adm. Roberto Gama e Silva, who directs national security operations in the upper Amazon and who has admitted blocking Ludwig at every opportunity.
Ludwig's rocky relations with the government can be traced to an obsessive secrecy, similar to that of the late Howard Hughes. For 12 years, Jari was closed to Brazilian reporters, sparking wild stories of U.S. Marines training in his "enclave" or of Brazilian peasants pressed into slavery to work conjured gold mines.
Today, Jari is open to all comers. Still, all Jari officials contacted for this story refused interview requests.
In Brazil's current liberalized climate, many nationalists are bitter about a foreigner owning huge tracts of land. Reflecting these attitudes, a Rio congressman last month launched a book entitled "Ludwig, Emperor of Jari," which denounces the project as "a cancerous enclave in Brazilian territory." A manifesto by an Amazonian defense committee describes Jari as "a revolting challenge to the nation" and a play currently running here is called "Jari, the Country of Mister Ludwig."
Next year, the government faces the most inclusive electoral test in its 17 years, and the politically acceptable solution to Jari would be to find a Brazilian buyer. Ludwig has no heirs, and in 1974 he gave Jari to his Zurich-based Swiss Institute for Cancer Research.
But Brazilian billionaires are as rare as snowdrifts in the Amazon. The best candidate is a close friend of Ludwig's, Augusto Trajano de Azavedo Antunes, 72, who has made millions from Amazonian iron and manganese holdings.
Antunes had described Jari as "the most extraordinary undertaking I have ever seen in my life," and government officials hoped he would lead a Brazilian consortium to buy majority interest. But early this month, Antunes said he wasn't interested.
While politicians, businessman, and bankers wrangle over Jari, many scientists believe nature may decide the project's fate.
"With monocultures, there is a very high probability of disease and insects," says Philip M. Fearnside, an ecologist with the National Institute of Amazonian Research in Manaus."The history of the introduction or monocultures throughout the world has shown this pattern many times over."
Natural jungle is protected by variety, he adds. In a study of Jari published last year in Interciencia magazine, Fearnside noted that a fungus similar to Dutch elm disease has infested several melina plots.
In 1927, another American entrepreneur, Henry Ford, bought 4,000 square miles of jungle about 500 miles upriver from Jari. Baptized Fordlandia, the estate became a vast rubber plantation supplying rubber for Ford's tires. For several years, the plantation thrived. Ford-built trains carried logs to bustling sawills and the community benefited from Ford-paid education and health care.
But after a few years, a South American leaf disease appeared and wiped out the rubber plantations. In 1942, Fordlandia closed after losing millions of dollars. Today, local subsistence farmers can show visitors vintage Ford trucks rusting in the jungle