Tucked away up Rustic Canyon is a sordid bit of local history.

Surrounded by the rugged mountainsides and overgrown by brush, the burned-out and crumbling buildings are what remain of the Murphy Ranch, where during the late 1930s a small group hoping to establish a Nazi utopia built an elaborate infrastructure that included a 395,000-gallon concrete water tank, a 20,000-gallon diesel fuel tank and a power station.

Hikers who reach the site, usually by climbing the creek bed from Will Rogers State Historic Park, are sometimes surprised.

"People who don't know the story come upon this and say, 'What the hell is going on?' " said Thomas Young, a professional photographer, local historian and president of the Palisades Historical Society. Young learned about the ranch while growing up in the Pacific Palisades area, and it was included in a book on the history of Rustic Canyon written by his mother, Betty Lou Young. Thomas Young took the photographs for the book, which was published in 1975.

The story, which Young admits is sketchy, centers on the owners of the Murphy Ranch, Winona and Norman Stephens, and a mysterious but persuasive German named Herr Schmidt. Although county records say a Jessie M. Murphy purchased the property in 1933, Young said there is no other record of her, and no one in the area ever saw her, leading him to suspect that Murphy was a front name. The name Murphy Ranch, however, stuck.

Norman Stephens was an engineer with silver mining interests in Colorado, and apparently financed the operation. His wife, the daughter of a wealthy industrialist, had a strong belief in metaphysical phenomena, and apparently fell under the spell of Schmidt, who claimed to have supernatural powers.

Schmidt convinced the Stephenses that once Europe collapsed and Germany emerged victorious in the war, anarchy would break out across the country, and law and order would break down. His plan was to create a command center in which the National Socialist community would wait out the war. They could then emerge from their mountain retreat and impose order on society.

It apparently made sense to the Stephenses, for they proceeded to spend an estimated $4 million to build an infrastructure that would be enough for a small town. They also made plans to build a four-story mansion that were never carried out, probably because they ran out of money, Young said.

"Thank God they didn't have the assets to pull it off," he said.