Stiefel's Pursuit of
By Spencer Heath MacCallum
On June 8, 2006 we lost to cancer a unique freedom fighter, scientist,
inventor, and entrepreneur, Werner K. Stiefel, 85 years old, of Vero
Beach, Florida, survived by his wife, Marie, and six children. He was
such a private person that not many people knew him.
Werner believed as an act of faith, as do I, that human social organization
in the future will be stateless. Such an assumption is warranted for
the same reason as the scientist's assumption that the universe is a
cosmos and not a chaos. That is to say, it's a productive assumption.
The scientist can't prove the universe is rational, but without that
assumption, he would make no discoveries. He wouldn't expend the effort.
In the same way, it is productive to assume that human society which,
after all, is very young, is a work in progress and that we will outgrow/are
outgrowing the conflicted behavior of politics.
The interesting question is how we will outgrow that conflicted
behavior, and therein lies the value of the productive assumption: it
prompts the search for new understandings of the evolving social process.
To engage in such discovery is inspiring, and inspiration lifts our
spirits. It is the fountain of creativity. Perhaps more than anything
else, that is what being human, in the best sense of the word, is all
Around 1970, I made the acquaintance of Werner, who was developing plans
to build a free community. While the community would need to be effectively
governed, it would differ from communities as we know them by being
internally consistent. In no way would its management infringe upon
property rights. There would be no taxation or other discretionary authority
over anyone's person or property.
Werner had been inspired and awakened philosophically by reading
Atlas Shrugged. But unlike many Randians, he saw an inconsistency
in her tolerance for the state. He realized that men act in their own
interest as they perceive it, and that is no problem when they are dealing
with their own person and property. But when they acquire discretionary
authority over persons and property not their own, problems arise, since
their perceived interest and that of the owners must at some point diverge.
The private individual then must resist, even to the forfeit of his
life if he cannot prevail, or else live for the sake of another. The
last is irreconcilable with the oath taken by all in Galt's Gulch:
I swear by my life and my love of it that I will never live for the
sake of another man, nor ask another man to live for mine. (Atlas
Shrugged 1956: 680).
family had experienced Nazi Germany in the 1930s. Unable to rescue any
of the assets from the family soap manufacturing business in Germany,
he and his father and brother set up a new business in the United States,
based on what they carried in their heads. Today Stiefel Laboratories
is the largest privately-owned dermatological company in the world with
over 2,500 employees and offices in more than 100 countries. Lubriderm
is one of their best-known products. Werner remained president and CEO
until his retirement in 2001.
Reading Atlas Shrugged, Werner woke up to a sobering question.
When conditions had deteriorated in Germany in the 1930s, many people
had fled to the United States. But even then, Werner saw symptoms of
the same thing happening in the United States that he had witnessed
in Germany. When the time came, he asked, where could people flee from
the United States?
Taking a cue from Ayn Rand, Werner conceived of a "Galt's Gulch"
(aka Mulligan's Valley, aka Atlantis) somewhere on the
oceans, a community on the high seas outside the political jurisdiction
of any nation. Adopting the name "Atlantis" (not to be confused
with Erik Klein's project by the same name in the years 1993"1994,
also to promote a floating sea city, but not apolitical), he set about
making the dream a reality, using his private resources and not any
of those of the company. His endeavor would prove to be a fit subject
for a heroic novel after the manner of Rand.
A Herculean Effort
Around 1970, Werner purchased a motel near the company's main plant
in Saugerties, N.Y., and invited libertarians to come and live there
while they worked in the surrounding area and, in their free time, to
help plan the Atlantis Project. He conceived of the project in three
stages. Atlantis I was the Saugerties Motel. Atlantis II would be a
ship at sea, and Atlantis III would be a floating community or perhaps
a community on dredged-up land on some submerged seamount. The ship
would play an indispensable role as supply vessel and living quarters
in the construction phase of Atlantis III.
At Saugerties"Atlantis I"Werner undertook to transform those who
had joined him into a seasoned team that could work under any and all
conditions. He gave them the daunting task of building the ferro-cement
ship that would be Atlantis II. The team passed this first test and
sailed the ship south into the Caribbean, where a tropical storm destroyed
it, fortunately with no loss of life.
Undaunted, Werner obtained another vessel and located a spot in the
Caribbean outside any political jurisdiction where the depth was barely
four feet at low tide. He had just completed the arduous task of constructing
four sea walls and was about to begin dredging sand to create his first
bit of artificial land on which to stand while extending Atlantis III,
when a gun boat showed up and leveled its guns at his crew. Someone
had found silver nuggets on the sea bottom nearby and had cut a deal
with Haitian dictator Papa Doc Duvalier for protection from pirates.
The gunboat captain, not knowing who these people were or what they
were doing in the area, decided to run them off. Werner was forced to
make a quick decision. Unwilling to risk people's lives, he abandoned
For a permanent base of operations, Werner then took a long-term lease
on a site in a freeport operated by the Haitian government. But when
a copy of his newsletter, The Atlantis News, fell into an official's
hands and revealed his underlying philosophy, the government forthwith
canceled his lease. From this experience, Werner learned the importance
of a low profile.
He next set about to create land on the Misteriosa Banks, a submerged
seamount midway between Cuba and Honduras, the same location that self-styled
Prince Lazarus Long would later publicize as the site for his ill-starred
New Utopia. Werner bought and towed to the site an oil rig of the type
that, once on location, could be inverted to stand on three legs. Before
it could be put in place, however, a hurricane blew it out to sea, destroying
Still undismayed, Werner purchased property on Grand Cayman and constructed
an attractive complex for a new center of operations, one that could
also serve as a retreat for the staff of Stiefel Laboratories. This
garden setting still exists. It became, among other things, the office
of the Atlantis Trading and Commodity Purchasing Service (ATCOPS), which
Werner had already established as the forerunner of the Bank of Atlantis.
ATCOPS made profits for many clients, including me, over the years and
struck an attractive silver coin, the deca, so-called because it contained
a decagram of silver.
From his base at Grand Cayman, Werner bought an island off the coast
of Belize and built improvements on it, his ultimate goal being to negotiate,
if not full sovereignty, then at least a grant of freeport status from
the government of Belize. Eventually, however, he tired of dealing with
the bureaucracy. With age advancing sharply on him, he put up the island
To Grow a Free Country
Beginning with Atlantis, Werner's goal had been to develop one or
a series of freeports at sea that would function much like new countries.
His approach had many practical features. Atlantis would start small
and grow by increments. Moreover, rather than trying to attract a residential
population, it would aim at businesses, starting with one of his own
plants"Stiefel Laboratories. Businesses would bring their own personnel
and their families, and these would require ancillary services, which
services in turn would require personnel, and the residential population
would grow naturally. This would enable the Atlantis community to develop
without fanfare. Promotional advertising of casinos and other recreational
amenities of tourism would not follow until much later. Until then,
the fledgling community would keep its profile low, almost under the
political radar screen. Werner's approach was also non-ideological.
He aimed at attracting effective, entrepreneurial people in business
and the professions without regard for political persuasion or lifestyle.
The most imaginative aspect of Atlantis was that the provision of governmental
services would be a business in and of itself, creating value in the
competitive market and subsisting on the market revenues those values
induced. There would be no need to appeal to philanthropy or to practice
taxation. Because the provision of public goods would be a business,
specifically that of a multi-tenant income property writ large, taxation
of the residents would be intolerable, anathema to the enterprise because
destructive of the values on which it depended.
From Werner's Herculean effort came an intellectual construct that survived
Atlantis. His constitution for a free community was a radical departure
from all political constitutions. The need for such a construct arose
because Werner's "Galt's Gulch" was to be far more than
a literary device. He had set about to apply it in the real world. Unlike
Ayn Rand, therefore, he could not ignore the question of how it would
There seemed no easy answer, however. By 1972, he had reached a low
point and almost despaired of the project, agonizing over the question
of how Atlantis could be administered as a community and yet its inhabitants
remain free. What form of government should he choose? Surveying all
of history, he found no form of government that would not be prone to
repeating the same tired round of tyranny the world had known for thousands
At that point, Werner came upon the ideas of my grandfather, Spencer
Heath, and saw their relevance. Heath had pointed out an advantage in
keeping the title to the land component of a real-estate development
intact and parceling the land into its various lots by land-leasing
rather than subdividing. This creates a concentrated entrepreneurial
interest in the success of the development, enabling it to be administered
far into the future as an investment property for income rather than
selling it off piecemeal for a one-time capital gain. Those holding
the ground title have an incentive to supply public services and amenities
to the place, creating an environment the market will find attractive.
To the extent they do so, they can recover not only their costs but
earn a profit to themselves and their investors. Heath forecast that
in time whole communities would be managed on this nonpolitical basis.
He saw this becoming the future norm for human settlements, each competing
in the market for its clientele. Community services, he thought, would
thus become a major new growth industry.
Heath's ideas brought into focus a vast and virtually untapped body
of empirical data from the field of commercial real estate, namely,
the emergence of multi-tenant income properties such as shopping centers,
hotels, office buildings, business parks, marinas, and combinations
of these and other forms. What all of these have in common is that title
to the land underlying a development is not fractionated by subdividing
but is held intact. While buildings and other improvements on the land
might be separately owned or not, the sites are leased. This preserves
the unified entrepreneurial interest in the whole development that enabled
it to be planned and built initially, and this concentration of interest
permits it to be operated as a long-term investment for income. The
result is very different from a subdivision, such as a condominium or
other common-interest development, which is likely to be governed by
a homeowners' association. A subdivision is an aggregation of consumers
looking to their own purposes and not in any sense a business enterprise
serving customers in the competitive market.
Werner had just such a working community in his Saugerties Motel"Atlantis
I. Here he administered all the community services contractually on
an ordinary, businesslike basis. Pragmatic businessman that he was,
he realized that here was his desired form of government"a proprietary,
free-market government in which there was no violation of property rights.
All relations were contractual, negotiated among the parties. The only
thing lacking that we are accustomed to find in a community is a city
hall exercising taxation and other discretionary authority over the
inhabitants and their property. All Werner needed was to preserve this
form of organization and move it out to sea.
Why had no one thought of this before? Why isn't it common wisdom?
Doubtless a major reason is that the dynamic, evolving market process
is recent in human history, at least to the degree that we know it today,
and our understanding of it only beginning. Boston's Tremont House,
regarded in the industry as the first modern hotel, was built only 175
years ago. All subsequent forms of modern, multi-tenant income property
have evolved since then. Only with the advent of modern technology and
business practice, including all the various supportive institutions
of banking and finance, insurance, communications, market prices, modern
accounting methods, and so forth, could a community fully take the form
of a competitive business enterprise. In addition, we are used to idealizing
politicians as selflessly motivated, since in public life as we have
known it, self-interest and the public interest are opposed. Only in
the free-market process are the interests of customers and service providers
aligned. Unaccustomed to recipients of public services being customers,
it is not easy for us to accept public-service providers acting in their
own self interest.
Werner's Master-Lease Form
Werner saw that the master-lease form would be critical to the success
of Atlantis. It would be Atlantis' social software, as it were, capable
of generating an elaborate but internally consistent web of relationships,
all spelled out in the wording of the leases, subleases, sub-subleases,
etc. The sum of the agreements in effect at any given point in time
would be the written constitution of Atlantis. They could be as specialized
and distinct as circumstances might warrant, so long as they did not
contradict any part of the master-lease form.
Without a body of legislated rules to fall back upon, the master-lease
form would have to provide for every conceivable contingency. Werner
gave me the task of drafting it. It was a moment of truth. But I couldn't
dodge the assignment, since I had studied the question from the broad
viewpoint of social anthropology and had published the first description
of multi-tenant income properties as a distinct class of social phenomena
(The Art of Community, Institute for Humane Studies, 1970). No
mere theoretician, Werner assigned me a 2% equity in the venture.
Werner's master-lease form not only survived his Atlantis project,
it took on a life of its own. With Werner's approval, it was published
in several iterations, giving many people an opportunity to criticize
it and offer improvements. But because Werner was leery of prematurely
drawing the attention of the world's governments to the idea of private
settlement of the open seas, it carried no reference to Atlantis. It
appeared as a purely heuristic exercise in the free-market provision
of community services in a made-up setting called "Orbis,"
one of a hypothetical cluster of settlements in outer space. [See A
Model Lease for ORBIS, The Voluntaryist, Whole Number 81,
August 1996 and accompanying editorial comments.]
Of the many refinements of the master-lease form made by other people,
the single most important was that by Michael van Notten (1933-2002)
in The Law of the Somalis (Red Sea Press, 2005). A Dutch lawyer
who married into the Samaron Clan of Somalia and lived with them for
the last twelve years of his life, Van Notten launched the Somali Freeport
project to develop a large, multi-tenant income property provisionally
called Newland on land leased from the Clan. He conceived of Newland
as a purely private business venture with no flags, anthems, or any
of the ritual panoplies and paraphernalia associated with political
nations. If successful, it would have become something like a small,
latter-day Hong Kong, offering a business and professional environment
free of all burdensome bureaucracy and taxation. Located in their own
back yard, so to speak, it could become for the Samaron their stepping
stone to full cultural, economic, and technological participation in
the developed world. Traditionally a stateless people, the Samaron aspired
to such participation if it would not entail their being dominated by
a political government, their own or any other.
In adapting Werner's master-lease form to Newland, Van Notten made
a significant addition. He sketched out and incorporated in it a detailed
set of natural-law principles and supporting procedural rules. This
would enable a system of law to be in place from the beginning of the
development, from which point it could evolve of its own accord. It
would be a system of law, moreover, to which all members of the community,
including administrative and service personnel, would have freely consented
in their lease agreement or terms of employment.
Natural-law scholar Roy Halliday
wrote of this innovation that it
comes as close as anything
I have seen to establishing the framework for a civil society consistent
with liberty and natural rights. The idea of incorporating a description
of natural rights into the master lease for a proprietary community
is brilliant. It satisfies both the strong natural rights advocates
. . . and the skeptics who believe rights are created by contracts.
The lease contract provides a way to specify how rights are to be enforced.
In pursuing his vision of
freeports at sea, Werner Stiefel put into motion in a practical way
a plan for a wholly proprietary, nonpolitical public authority. Here
was his answer to the question of how to have public administration
and yet each and every person be fully empowered over his own person
and property. He believed that humankind would outgrow government as
we know it today. Perhaps what is most intriguing and heartening about
his formula for an internally consistent, open social software is that
it is not conjectural, but is extrapolated from a century and a half
of empirical data gleaned from observation of the marketplace.
[Spencer MacCallum is a social
anthropologist living in Mexico, where he played a key role in the economic
development of the pottery village of Mata Ortiz. He wrote The Art
of Community and edited and contributed to The Law of the Somalis:
A Stable Foundation for Economic Development in the Horn of Africa
(Red Sea Press, 2005). This article first appeared on LewRockwell.com
in June 2006, and is reprinted by both permission of the author
and Lew Rockwell.]