Leocadia Begbick, Trinity Moses, and Fatty »the Bookkeeper« are fugitives from the law.
In a desert landscape, a large, sputtering truck breaks down after an explosive backfire and the motor shuts down. Leocadia Begbick, Trinity Moses, and Fatty »the Bookkeeper«, who were on their way to the eastern American gold mines, have to change their plans. They decide right then and there to found a paradisiacal »net city.«
In the coming weeks, the city grows quickly, and the first »sharks« settle down. Jenny and six girls appear in search of men and dollars.
The news about the new city spreads quickly and reaches the large towns. Fatty and Moses praise the new quality of life in Mahagonny, where the drinks are cheap.
Malcontents from all over come to Mahagonny in droves, including the four lumberjacks Jim Mahoney, Jack O’Brien, »Bank Account« Billy, and Alaska Wolf Joe.
Jim Mahoney reaches his goal. Along with his friends, he is welcomed by Lady Begbick and the other founders of the city. They are offered girls and drinks for the best price.
Jim and Jenny grow close to one another; an intense flirtation begins.
All large enterprises have their crises: The guests and visitors become fewer, the prices begin to drop. Dissatisfaction begins to spread, despite the apparent comfort. Begbick, Fatty, and Moses complain about the business slump and think about how to start making money again.
All true seekers are disappointed. The joys of Mahagonny and the excess of things are no longer enough to keep Jim happy. He wants to leave, but his friends Jack, Bill, and Joe are able to dissuade him and bring him back to Mahagonny.
In the meantime some time has passed, and the city has grown further. In front of the Rich Man’s Hotel, the men of Mahagonny sit around drinking, smoking, and rocking back and forth. Jack thinks that he has found the »eternal art.« Longingly, Jim dreams of the primeval world of the forests of Alaska. He realizes that Mahagonny only exists because the world is a bad place. An aggressive mood begins to spread.
A hurricane makes its way to Mahagonny. From the proscenium, women, children, and animals storm the stage with their carts and luggage. The lights go out, the wind gets stronger, all f lee in panic.
During the night of horrors, Jim discovers the laws of human happiness. All are despairing, except for Jim, who calls for the abolition of all prohibitions. The motto of the city is now: »Do as you will!« The residents of Mahagonny dedicate themselves to general pleasures, while the hurricane inexorably makes its way toward the city.
Just at the very last moment, the hurricane changes its route and passes Mahagonny by, sparing the city. The people of Mahagonny express their relief exuberantly. From now on, their maxim is »All is permitted, do as you will!«
In the wake of the large hurricane, Mahagonny starts to boom again. Months later, Mahagonny is experiencing a renewed period of affluence. Four »moral portraits« show the abolition of the respective bans. In the first scene, entitled »Eating«, Jack stuffs his stomach. He eats incessantly until he drops dead.
The second scene is entitled »Loving«, and shows men standing in line in front of the Mandelay bordello. Begbick and Moses keep an eye on things. Jenny and Jim observe the cranes flying by.
The third scene is called »Fighting«, Alaska Wolf Joe dares a boxing match against Trinity Moses. Jim Mahoney puts all his money on this friend, in the spirit of old times. A deadly knock out ultimately brings Joe to the floor. Moses is named the victor, and Jim loses his bet. Disappointed, the crowd of eager onlookers disappears.
The fourth scene, entitled »Drinking«, describes alcoholic debauchery. Although Jim now has hardly any money, he buys several rounds for everyone. Everyone gets totally drunk. Using a billiard table and a curtain rod, Jim builds with Bill and Jenny a »boat« that they board. But their »sailing journey« is rudely interrupted. Begbick demands from Jim the money for the bill. But he can’t pay up. Neither Bill nor Jenny are ready to lend him money. Jim is tied up, all the others turn to their own affairs, playing pool or getting drunk.
It is nighttime. Jim lies tied to a lantern with one foot. People walk by him one by one, and he remains alone. Helpless and fearful, Jim faces the onset of the next »damn« day with trepidation.
Under the supervision of Begbick, the court case begins. Fatty takes his place as the defense lawyer, while Moses serves as the prosecuting attorney. Tobby Higgins, charged with murder, is declared innocent by the court after paying a bribe. Jim, accused of having no money, the worst crime of all in Mahagonny, asks Bill for a loan of 100 dollars. Bill refuses. Jim is sentenced to death. The residents of Mahagonny continue to dream of their ideal city. They believe they found it in Benares. In horror they discover that the city was destroyed by an earthquake.
Jim says goodbye to Jenny and asks her to not forget him. Standing before the gallows, he recognizes that his fate was already sealed when he came to Mahagonny to buy happiness. Jim is executed by hanging.
The end of Mahagonny nears. In an allegorical game, it is shown that both the existence of God as well as the threat of hell are useless; people are already in their own hell. Demonstrating, the residents of Mahagonny march back and forth proclaiming their ideals. Now they realize, »No one can help you or us or anybody!«