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The Reluctant Philanthropist

Wednesday, February 13, 2008

John D. MacArthur created one of the world’s great charitable foundations almost by accident.

Eccentric Billionaire Book TitleThe Eccentric Billionaire: John D. MacArthur—Empire Builder, Reluctant Philanthropist, Relentless Adversary
By Nancy Kriplen
Amacom, 240 pp., $24

John D. MacArthur was a weirdly but proudly penurious man. Despite his immense wealth, witnesses claim to have seen him pluck food from the trash and ask for food from a stranger’s plate. Sporting a loud checkered jacket and shirts unbuttoned at the neck, while chain-smoking cheap cigarettes, he looked more like a down-on-his-luck used-car salesman than a billionaire tycoon. Unlike Rockefeller, Vanderbilt, and other corporate titans, MacArthur never built himself a Xanadu-style mansion. He and his wife, Catherine T. MacArthur, spent their golden years living at the Colonnades Beach Hotel, “a hodgepodge of low white buildings” on Singer Island in Florida. MacArthur’s office was a Formica table in the hotel diner, from which he lorded over his billion-dollar insurance and real estate empire.  

MacArthur was astonishingly greedy. Even considerations of kinship could not constrain his avarice. After founding Bankers Life and Casualty Company, MacArthur watched the firm skyrocket in value—which prompted his attempt to snatch away his wife’s shares in the corporation. When his son Rod began to get rich selling collectible plates, MacArthur demanded a chunk of his company. When he was rebuffed, MacArthur padlocked the property where Rod’s inventory was stored. 

So how, then, did this notorious penny-pincher end up establishing one of the largest charitable foundations in the world? Did MacArthur change? Did he hope to wash away his misdeeds through aggressive philanthropy? According to Nancy Kriplen’s new biography, not in the least. 

John Donald MacArthur was born on March 6, 1897, the seventh child of a hardscrabble family living in West Pittston, Pennsylvania. His father, William MacArthur, tried to make it as a farmer, failed, and then found God. William took up evangelical training and dragged his family all around the country—from New York to Pennsylvania to Illinois, and then back to New York—in search of better positions in the ministry.  

Young John displayed little interest in religion and dropped out of high school after his first year. In an early act of salesmanship, MacArthur persuaded his parents to allow him to move to Illinois to find work. He worked short stints as a welder and a reporter, and served briefly in the U.S. Navy and in the Canadian Royal Flying Corps (RFC).

MacArthur was a colorful imp who loved to shock the sensibilities of others. He once arrived at a major business deal driving a rickety old pickup truck, then whipped out several million dollars in cash.

After leaving the RFC, MacArthur returned to Chicago and discovered his true calling: selling insurance. He sold policies for National Life and State Life Insurance Company, before setting out on his own. In a pattern that he would repeat throughout his life, MacArthur acquired a distressed company on the cheap and turned it around. As boss of the Marquette Life Insurance Company, he appalled the old guard of the insurance industry by selling low-priced policies to low-income Americans. It worked fabulously, and MacArthur soon got rich. He used his profits to buy other wobbling insurance companies, including Bankers Life and Casualty. Between 1940 and 1960, MacArthur became an industry giant. He also invested heavily in real estate, buying roughly 100,000 acres of land in Florida. There he established a new town, Palm Beach Gardens, on swampland, and launched its economy by luring employers such as the Professional Golfers Association and RCA. 

Though short on details, Kriplen’s book does reveal some of the means by which MacArthur made his fortune. To increase insurance policy sales, he sent out reams of direct mail and signed radio newsman Paul Harvey as a pitchman. To maximize the return on the building that housed Bankers Life, MacArthur used every inch of it for work, even hiring dwarves to labor in the low-ceiling basement. To increase employee productivity, MacArthur rewarded his top insurance salesmen with cash bonuses and invited them to exclusive parties. He also had a genius for cooking up promotional ideas. To lure customers to one of his hotels, he started a television game show that was filmed at the hotel.           

MacArthur’s relentless pursuit of profit and his uncanny salesmanship helped make him one of the richest men in the world. While Howard Hughes and other billionaires of the day lived furtively, MacArthur soaked up the limelight. Not only did he enjoy the attention, he also recognized that it amounted to free publicity for his businesses.          

In terms of personality, MacArthur was a colorful imp who loved to shock the sensibilities of others. Once, he arrived at a major business deal driving a rickety old pickup truck, and then stunned onlookers by whipping out several million dollars in cash.   Another time, MacArthur had matchbooks printed with an advertisement for massage services that listed the phone number of his sister-in-law. 

Yet, in Kriplen’s terse telling, MacArthur comes off less as an eccentric than a monomaniacal jerk. If he had a sense of right and wrong, one does not find much evidence of it in this book. MacArthur abused the legal system by filing lawsuits against anyone who got in his way. He was not much of a family man: he was a womanizer who groped his female employees and paid little attention to his children. Though he had admirers and acolytes, it is unclear whether MacArthur had a single true friend. At root, he appears to have been selfish man who did as he pleased and cared little if he hurt others in the process. 

So it was a bitter pill for the aging MacArthur to swallow when one of his advisers informed him that, upon his death, much of MacArthur’s fortune would have to be sold off to cover the tax consequences. MacArthur, who had fought the tax man his entire life and railed against big, intrusive government, was not going to let that happen. 

In 1970, with little fanfare, he signed the papers to establish the John D. and Catherine T. MacArthur Foundation. He cribbed the purpose language straight from IRS regulations: the foundation would operate for “charitable, scientific, literary, and educational purposes.” MacArthur did not care what it did. He told the business associates that he put in charge of the foundation to figure it out. He was going to spend his remaining days doing what he enjoyed—making money. 

John D. MacArthur died of pancreatic cancer in 1978. A few years later, his beloved Bankers Life and Casualty Company became part of Conseco. Yet his foundation lives on. Today, the John D. and Catherine T. MacArthur Foundation has more than $6 billion in assets and gives away $260 million in grants every year. Not a bad legacy—though one wonders if MacArthur himself would have thought much of it. 

Kevin R. Kosar is a writer in Washington, D.C.

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