Eccentric Billionaire: John D. MacArthur--Empire Builder, Reluctant Philanthropist, Relentless Adversary
by Nancy Kriplen
177 pp., $24
Spend enough time studying the history of philanthropy and you’ll discover that there are many books about foundations and donors that should exist—but don’t. There is no history of the Ford Foundation, for example, even though there are books about various Ford programs. There is no biography of J. Howard Pew. And until now, the only “biography” of John D. MacArthur was The Stockholder by William Hoffman, a vicious diatribe published in 1969 that has aged poorly and says nothing about MacArthur’s philanthropy.
Nancy Kriplen’s Eccentric Billionaire is thus the first true biography of one of America’s most successful businessmen and generous philanthropists. As such, it is a significant and important contribution to the literature. Unfortunately, the book feels distinctly padded. The page-count is in fact very low, yet the publisher saw fit to add a blank page or two between each of the book’s 21 chapters. Moreover, Kriplen litters the narrative with irrelevant asides. When she describes MacArthur’s first years in the insurance business, Kriplen adds two pages on the history of insurance in America. Even worse, she includes psychological speculations about events that no biographer could ever possibly know, such as how an eight-month-old MacArthur felt when his five-year-old brother Roderick was killed in a gun accident.
Nonetheless, Kriplen makes a real contribution by presenting new primary-source evidence. She has conducted important archival research, combed through MacArthur’s private papers, and interviewed his surviving friends and associates. As a result, Eccentric Billionaire provides a relatively full portrait of MacArthur’s commercial success and helps explain his reasons for creating one of America’s largest foundations.
John D. MacArthur was born in 1897 in Pittston, Pennsylvania. His father was an itinerant Presbyterian evangelist who, when not fulfilling his ministry, worked as a clerk and insurance salesman. MacArthur dropped out of high school after his freshman year. He enlisted in the Navy during World War I, but was discharged after five months for schizophrenia. (“His conduct is bizarre,” said the medical officer who signed MacArthur’s discharge papers. “He is impulsive and not reliable.”) MacArthur then joined Canada’s Royal Flying Corps, where he served for the duration of the war.
Upon returning to civilian life, MacArthur joined his brother Alfred in the insurance business. MacArthur was a natural salesman, and soon became enough of an insider to learn which distressed insurance companies he could buy at bargain prices. In 1935, he acquired Bankers Life and Casualty of Chicago, which would become the basis of his fortune.
MacArthur was willing to take risks that his competitors were not. During the Great Depression, for example, most insurance companies would insist on a minimum premium payment of $10 per month, so that the insurers could maintain a reliable cash flow. Bankers Life, however, happily sold policies with a $2 monthly premium. Bankers Life also hired a great many handicapped workers and, unlike many other companies, did not enforce a mandatory retirement age. (To be sure, MacArthur’s reasons for hiring disabled and senior workers were not entirely altruistic; Bankers Life received substantial governmental subsidies for keeping such workers in the labor force.) MacArthur’s innovative hiring policies and his masterful salesmanship proved to be a powerful combination.
In the 1950s, MacArthur used his wealth to invest in Florida real estate; he eventually became the largest private landowner in the Sunshine State. By 1970, between insurance and real estate development, MacArthur was one of America’s five billionaires.
But for all MacArthur’s entrepreneurial savvy, he kept his business entities surprisingly simple: Bankers Life was a giant sole proprietorship. After a health scare in the late 1960s, MacArthur was advised by his lawyer, William Kirby, that he needed to reorganize his estate. MacArthur had planned to give half of his estate to his widow and the other half to his children—which, Kirby argued, would result in most of the estate going to the IRS.
Kirby persuaded his client to establish a foundation. The choice, Kirby told MacArthur, was simple. His money could either be administered by bureaucrats or by “people you trust.” In October 1970, Kirby finished the incorporation papers for the new foundation. MacArthur made only one change. He insisted that, because she helped “build up” his wealth, his wife Catherine’s name be added to the foundation’s title. Thus was born the John D. and Catherine T. MacArthur Foundation.
But what would the new foundation do? Here MacArthur made a major mistake: he decided to let Kirby and the board of trustees set the foundation’s mission. Kirby explained MacArthur’s reasoning in an unpublished memoir that Kriplen has unearthed. According to Kirby, MacArthur said, “I’m going to do what I do best; I’m going to make [money]. You guys will have to figure out when I’m dead what to do with it.” Little surprise, then, that when Kiki Levanthes of the New York Daily News interviewed MacArthur in 1976, she reported that the billionaire’s philanthropy was based more “out of a desire to keep his business together than any charitable purpose.”
In a 1976 interview to Canadian television, MacArthur offered an additional reason for keeping his philanthropy at arms-length. Unlike other billionaires, MacArthur did not spend much money on bodyguards and security. Anyone who wanted to find him would only have to go to the coffee shop on the ground floor of Palm Beach’s Colonnades Hotel (which MacArthur owned). There the tycoon spent his days, sitting at his favorite table, making deals, chain smoking, and drinking heroic amounts of coffee. “Women in straw hats and bathing suits trot by his table on the way to the beach,” reported the New York Times in 1973.
By not discussing his charitable intentions, MacArthur hoped to avoid a throng of mendicants seeking access to his cash. When the Canadian broadcaster asked him about philanthropy, MacArthur quickly changed the subject. If he revealed what he planned to do with his wealth, the billionaire said, “it would be open season” for grant-seekers. “I would be a sucker,” he added.
At least one potential grantee did manage to form a friendship with MacArthur. MacArthur’s brother Charles was a playwright best known for co-authoring The Front Page. After Charles MacArthur’s death in 1956, his widow, Helen Hayes, established the Charles MacArthur Center on the American Theatre at Florida State University in his memory. John D. MacArthur made a few small contributions to the center, including a 1974 grant that enabled Florida State to produce an unpublished Charles MacArthur play.
Richard Fallon, dean of Florida State, spent a great deal of time with MacArthur, and the transcripts of those interviews are an invaluable resource for anyone studying MacArthur family history. Nevertheless, Fallon’s efforts to persuade MacArthur to make a major grant failed; in fact, the MacArthur Foundation never gave the MacArthur Center any money. The MacArthur Center was shut down.
MacArthur’s failure to take philanthropy seriously resulted in the foundation spending money for causes he opposed. His politics were conservative in nature. The MacArthur Foundation’s original 1970 deed said that one purpose of the foundation was to support “ways to discover and promulgate avoidance of waste in government expenditures.” In 1973, he complained to the Chicago Tribune that young people could no longer make a fortune like his because “there’s too much government.”
MacArthur had a particular animus against environmentalists, whom he felt were blocking efforts to develop his Florida properties. In 1973, MacArthur told the Palm Beach Post that environmentalists had made sure that developers “need a permit for everything. Not one permit, but nine of them for everything. You can’t dig a hole without a permit from somebody.” Environmentalists, MacArthur told Nation’s Business in 1974, are “little old ladies and bearded jerks” and “obstructionists [who] just throw rocks in your path.”
When MacArthur died in 1978, most of the foundation’s board members were friends and associates of the donor. “We’re just a bunch of Midwestern businessmen devoted to free enterprise and opposed to more government controls,” one of them told author Waldemar Nielsen.
But between 1979 and 1981, John MacArthur’s son, J. Roderick (“Rod”) MacArthur, waged a massive legal battle against the foundation. The reasons for this battle were partly ideological (the younger MacArthur was a devoted liberal) and partly personal (father and son had fought bitterly for decades). By 1981, Rod MacArthur had won his crusade. All of the board members were ousted, except for William Kirby and broadcaster Paul Harvey.
Today the MacArthur Foundation is one of the pillars of the liberal philanthropic establishment. Despite its founder’s reservations about environmental regulation, the foundation is a major donor to green causes. Of course, much of the fault lies with MacArthur himself. In a 1976 Chicago Tribune interview, MacArthur explained why he did not want his dead hand to control his foundation. “I’ve seen too many people, including Henry Ford, try to administer their estates from the grave,” MacArthur said. “You have changing times. Besides, you lay down rules and people don’t follow them.”
Had MacArthur more explicitly formulated his intentions, it seems likely that the MacArthur Foundation would still support causes favored by its founder. It is instructive to compare the MacArthur Foundation with the Barnes Foundation, whose leaders were only able to subvert the expressed wishes of founder Albert C. Barnes after a 16-year legal battle. In general, courts will help preserve donor intent, but only if donors make their wishes clearly known.
Philanthropists can learn from John D. MacArthur’s mistakes. To preserve their intent, donors must clearly and explicitly express their charitable intentions, and include sunsetting clauses if these intentions are ignored. Otherwise, donors will be in the same situation as John D. MacArthur, with their wealth funding the very causes they had once opposed.
Martin Morse Wooster explores John D. MacArthur’s life and ideas in The Great Philanthropists and the Problem of Donor Intent.