The Eccentric Billionaire: John D MacArthur – Empire Builder, Reluctant Philanthropist, Relentless Adversary
John D MacArthur is not exactly a name to conjure with, something that gave him no cause for complaint throughout a long business career. He made his first fortune in the unglamorous business of life insurance as the sole shareholder in Chicago-based Bankers Life and Casualty, and a second fortune from real estate, especially in Florida, where he was the largest private landowner in the state. By the mid-1960s he was one of five living billionaires, the others being HL Hunt, Howard Hughes, John Paul Getty, and Daniel K Ludwig. When he died in 1978 he was reckoned to be the second richest man in America after Ludwig (a shipping magnate).
He was born in 1897, the youngest of seven children, and his childhood was far from privileged — his father William was an itinerant preacher with the Christian and Missionary Alliance. The eldest MacArthur child, Alfred, resisted his father’s promptings to follow him in the ministry and went instead into the insurance business. One commentator later described Alfred as ‘the rich and domineering older brother… whom John was determined to outpace’. Alfred went on to make a fortune of $300 million, but this was a fraction of what John would achieve.
Following Alfred into the insurance business, he quickly discovered that he could work only for himself. He named his first company after the imposing building in which he rented an office, giving the impression that the building had been named after the company. He struggled through the Depression, taking care to bank premium cheques, but tossing claims in the wastepaper basket; or sending settlement cheques to the wrong address as a delaying tactic. But his true entrepreneurial flair was demonstrated in his pioneering decision to sell cheap policies to the poor, using low-quality mailings and magazine adverts to get their attention. As he expanded his company, acquiring other more established names in the business, he occupied a sprawling cluster of buildings on Chicago’s northside rather than seek fancy premises, believing as he did that ‘brick and mortar will not sell insurance’. Although a canny businessman, one of his mottos was ‘Pigs get fat and hogs get slaughtered’, meaning that too much greed is not always sensible.
A brief first marriage was followed by a Mexican mail-order marriage in 1937 to his brother Alfred’s teenage secretary Catherine, who held 133,000 shares of his company’s stock after they had pooled resources to acquire it. He came close to divorcing her in 1949, but she counterclaimed claiming a fifty-fifty partnership. A judge persuaded the couple to sort out their differences and they stayed together until John died 29 years later.
In the 1950s MacArthur started acquiring parcels of land in Florida and in 1959 he and Catherine moved there permanently. Among his various projects, he created the city of Palm Beach Gardens, luring companies to relocate there and transplanting banyan trees from elsewhere in the state to beautify the surroundings. He also acquired the Colonnades, a rundown hotel complex on Singer Island, at the north end of Palm Beach, transforming it into a celebrity haven, though eschewing excessive luxury. For a decade and a half, his office was a Formica-topped table in the hotel’s coffee shop, where he would sit and hold court, doing deals over the phone. It was typical of a man for whom frugality was a watchword.
There was nothing ostentatious about MacArthur. He wore cheap suits and his favourite garment was a garish, green plaid jacket (actually the MacArthur family tartan). He would fly coach as an example to his insurance executives. ‘Don’t ever go to dinner with him,’ his sister-in-law, the actress Helen Hayes, once told a young academic seeking patronage. ‘You will end up paying.’ Kriplen’s book is slight and could certainly have benefited from more anecdotes, but it tells the intriguing story of this shadowy billionaire with dash and enthusiasm.
MacArthur was reluctant to contemplate tax planning in the event of his death. ‘I’m a better salesman than you are and I could never get people to talk about death, and you are not going to be able to get me to talk about death,’ he told his attorney, William Kirby. ‘Any insurance salesman knows how hard it is to get people to talk about death. Instead, you talk about money for their old age or protection for education for their children. I don’t need money for my old age.’ Nonetheless, his attorney persuaded MacArthur that the only way to keep his Banker’s Casualty ‘insurance family’ from being broken up to pay inheritance taxes would be to create a non-profit foundation. ‘Who do you want to decide how this fortune should be spent,’ the attorney asked him, ‘bureaucrats or people you trust?’ Thus, the John D MacArthur and Catherine T MacArthur Foundation was born in 1970.
MacArthur didn’t want to know how the money would be spent, since he preferred making it, but he’d have loved the newspaper headline which greeted the winding up of his estate, which read: ‘Tax from Billionaire’s Estate Low.’ With assets of over $5 billion by the end of 2004, it was ranked eleventh in the US in the 2006 Foundation Directory. It was MacArthur’s son Rod — he had made a separate, if modest, multi-million-dollar fortune from the commemorative-plate business — and attorney William Kirby who came up with the idea for the annual ‘genius awards’ for creative brilliance, sometimes known as MacArthurs.
Review by Christopher Silvester