Butler’s utopian satire, and the land it described, with its Musical Banks and Hospitals for Incurable Bores, took its name from a reversal of ‘Nowhere’: that much we know. Although it’s not quite a perfect reversal: properly reversed, ‘Nowhere’ would be ‘Erehwon’. Why did Butler leave the central ‘wh’ unreversed?
The answer may lie in the fact that the book emerged from Butler’s experiences in New Zealand in the early 1860s. It drew extensively on New Zealand life, and particularly on Maori customs and names, such as the characters ‘Kahabuka’ and ‘Mahaina’. The name ‘Erewhon’ fits the Maori template. By leaving unreversed the central ‘wh’, Butler echoed Maori place-names such as Arowhena (North Island; a name also given to Mr Nosnibor’s daughter) and Arowhenua (South Island, near Temuka). It seems likely that the imperfect reversal was intended to add one more level of specifically New Zealand-inspired satire.
Jones, Joseph Jay: The Cradle of Erewhon: Samuel Butler in New Zealand (1959)