John D. MacArthur

American insurance executive and real estate developer

  • Born: March 6, 1897
  • Birthplace: Pittston, Pennsylvania
  • Died: January 6, 1978
  • Place of death: West Palm Beach, Florida

Through his ingenuity and capacity for hard work, MacArthur scraped his way through the Depression to become, at his death, one of the richest men in the United States. His immense wealth supports one of the largest American foundations.

Sources of wealth: Insurance; sale of products; real estate

Bequeathal of wealth: Spouse; children; charity

Early Life

John Donald MacArthur was born in 1897 in West Pittston, Pennsylvania, the seventh and last child of William and Georgiana MacArthur. William, an evangelist, moved his family to Chicago in 1901 to serve in a supervisory position with the Christian and Missionary Alliance and also as pastor of the Gospel Tabernacle at Lawndale. A charismatic speaker who traveled a great deal, William was a harsh bully at home, where Georgiana and the children barely managed to get by. In his first year of high school, John, a prankster, did well in English, history, and algebra but made D’s in deportment. At the beginning of his second year, Georgiana died, and John dropped out of school in 1915.

First Ventures

Following halfhearted attempts at selling insurance and working as a cub reporter, MacArthur served brief stints in the U.S. Navy and the Royal Air Force before being discharged as unfit for service. He returned to Oak Park to work for his brother, Alfred, selling insurance for National Life and working relentlessly to sell policies. He married Louise Ingalls in 1920 and the couple had two children, but the marriage failed.

In 1928, MacArthur met young, ambitious Catherine T. Hyland at National Life, and they both left to work for the State Life Insurance Company of Illinois. While the Depression was no kinder to insurance companies than to any other business, MacArthur’s response was to work even harder. In exchange for release from his contract, State Life aided him in purchasing a small, failing firm that became Marquette Life Insurance Company and severely tested MacArthur’s frantic efforts to keep it afloat during 1930-1931. Here MacArthur began the questionable practice of stalling the payment of claims in order to show a surplus for the insurance examiner, which enabled him to temporarily prevent insolvency.

In 1935, MacArthur borrowed $2,500 and purchased Bankers Life and Casualty, a small, bankrupt company. While Catherine ran the office, MacArthur sold policies and continued breaking the rules to keep the company alive. He sold policies for amounts below the $10 minimum premium, going as low as $1 or $2, and sold policies by mail. MacArthur sent a letter to one thousand potential customers a week, and the results were astounding. Before long, he had received $70,000, and by 1941, Bankers Life had $20 million of life insurance in force and assets of $404,598.

Mature Wealth

The success of Bankers Life allowed MacArthur to expand his company’s home office and, through a series of mergers, acquisitions, and divestitures, to convert Bankers Life from a mutual insurance company to a stock company, with only one stockholder: himself. He bought up office buildings in New York and a hotel in Las Vegas, and he invested in Theatre Arts magazine, where his brother, Charles MacArthur, was the editor. Charles eventually became a famous playwright, and MacArthur also invested in theater productions by Charles and writer Ben Hecht.

MacArthur continued to be targeted by insurance commissioners who investigated his company’s investment activities and policies—procedures that MacArthur found invigorating. He relished battling adversaries, and he pursued his own litigious inclinations by engaging in a three-year clash with the state of Georgia’s insurance department. He also skirmished with Blue Cross and Blue Shield, when these companies complained that Bankers Life’s white cross logo was similar to their blue cross logo. In taking on authoritative bodies and challenging them with his skill and energy, MacArthur was frequently found guilty and fined, but he enjoyed the fray.

In the mid-1950’s, MacArthur’s foreclosure on several thousand acres of land at Lake Park in Palm Beach County, Florida, led to plans for a $20 million real estate development to include hotels, motels, a yacht club, and a golf course along the oceanfront, as well as sixty-six hundred home sites, half of which were on the ocean. After World War II, Florida was ripe for a land boom, and MacArthur was a new type of entrepreneur whose wealth allowed him to develop cities and huge areas of the state. As Bankers Life continued its phenomenal growth, MacArthur continued buying millions of dollars’ worth of property. He created a new Florida city, Palm Beach Gardens, that covered four thousand acres. He transplanted huge banyan trees from other areas to decorate the city and its new shopping center. To provide jobs for the families moving into MacArthur’s city, RCA (Radio Corporation of America) announced plans for a $4 million electronic data processing plant in the area that would initially employ one thousand workers. MacArthur’s development resulted in construction of schools and churches, and Palm Beach Gardens was cited in the 1970 census as the fastest-growing city in the United States. Its population in a decade had risen from 1 to 6,103, and by its twentieth anniversary the population was 15,000.

After failing to convince Disney World to locate in Palm Beach County, MacArthur settled for the headquarters of the Professional Golfers’ Association of America (PGA), lending the association $1.5 million for an elegant new clubhouse. In 1963, MacArthur purchased theColonnades Beach Hotel at the south end of Singer Island in Palm Beach County, extensively remodeling the slightly rundown hotel to include more than four hundred rooms, duplex apartments, restaurant facilities, tennis courts, and swimming pools, all on sixteen acres of private land. The resort proved to be quite popular with tour groups and celebrities. Against advice, MacArthur insisted upon renovating rather than rebuilding the Colonnades because he liked the hotel’s “character.” He closed deals from his office in the hotel’s coffee shop, skillfully controlling his empire from the center of its bustling activity.

In addition to his own development projects, he served on boards of directors for numerous other real estate development companies in Florida. He owned a West Palm Beach television station, and when he was nearly eighty, he continued to buy hotels to add to his valuable ocean frontage. He donated one prized stretch of oceanfront property to the public.

MacArthur elected to live out his remaining years in Florida, while carefully maintaining his Illinois residency. His legendary rise to become the largest landholder in Florida and the nation’s second-richest man was fueled by “hard work, luck, and opportunism” (his own assessment), guided by frugality, if not miserliness, and goaded by a fear of sinking all his capital into “one thing.” With his wife, Catherine, who was also his business partner, he had witnessed the Florida development era come full circle in more environmentally conscious times, when legislation was passed to protect the state from real estate developers like himself.

On January 6, 1978, MacArthur died of pancreatic cancer in West Palm Beach, Florida. By the end of 1997, assets at Bankers Life and Casualty, the nation’s second largest health and accident insurer, amounted to $1.04 billion, according to insurance examiners.

Legacy

In 1970, MacArthur established the John D. and Catherine T. MacArthur Foundation, with his Bankers Life fortune as its cornerstone. Having balked at the idea for years, he placed no restrictions on the use of his fortune, maintaining that as making money was his strong suit, he hoped the foundation’s trustees would spend his money to “do more good for the country than [he] would.” The foundation is one of the largest philanthropic organizations in the United States. Its first grant in 1979 went to Amnesty International, and it has continued to support human rights, affordable housing, community organizations, environmental causes, reproductive health, population control, public radio, and independent documentary film production. The foundation, famous for the grants it awards annually in the interest of human rights and individual efforts, is the culmination of the fortune of an enigmatic billionaire, who stubbornly refused to accept defeat during the Depression.

Bibliography

Grimm, Robert T., ed. Notable American Philanthropists: Biographies of Giving and Volunteering. Westport, Conn.: Greenwood Press, 2002. Contains seventy-eight profiles of individuals and families who have contributed to American society with donations and charitable work. Discusses their educations, careers, and motivations and evaluates their contributions.

Kriplen, Nancy. Eccentric Billionaire: John D. MacArthur—Empire Builder, Reluctant Philanthropist, Relentless Adversary. New York: Amacom, 2008. Well-researched biography of MacArthur and his rise to prominence. Emphasizes MacArthur’s more contradictory qualities, quirks, and style of doing business.

Sanford, Bob. John D. MacArthur: A View from the Bar, a Memoir. Highland City, Fla. Rainbow Books, 1996. Sanford, a bartender working a short distance from MacArthur’s office at the Colonnades Beach Hotel, provides a glimpse of MacArthur, focusing on his generosity and human relationships.

Scott, Janny. “MacArthur ’Genius’ Grants Get Some Heat and a New Head.” The New York Times, December 9, 1997. Surveys the sharp criticism of the MacArthur Fellows Program, as well as the program’s establishment, awards, purpose, process, directors, recipients, bias, and benefits.

Shekerjian, Denise. Uncommon Genius: How Great Ideas Are Born. New York: Penguin, 1991. Features interviews with forty MacArthur genius award recipients, who discuss the grant’s influence on their accomplishments and creativity.