HomeMy WebLinkAbout1965-11-07 A Man Involved in Money (Miami Herald)A Man
Involved in Money
John D. MacAr thur has a 30-year winning streak and
By NIXON SMILEY
OHN D. MacArthur, one of the nation's
richest men, lives in a $39,000 house and
draws a salary of. $25,000 a year. And
when you see him slouching about his Colonnades
Hotel at Palm Beach Shores shirt -sleeved and tie -
less — you can believe that he lives on a much small-
er income.
MacArthur, as incredibly healthy at 68 as he is
incredibly rich, is a rare individual who makes no
effort to impress anyone.
Owner of the MacArthur Insurance Group, which
includes Bankers Life and Casualty Co. of Chicago
and 11 other insurance firms, he is worth more than
$300 million.
He could live in as fine a Palm Beach mansion as
he wished to build, have a chauffeur, a house full of
servants, and give lavish parties.
When such an idea was suggested to his wife,
she exploded with laughter.
"Him air Palm Beach!" she exclaimed. "He'd go
nuts, with nothing to do."
MacArthur is an early riserFrequently getting
up before his wife does, he may fry himself an egg,
or he may get into his two -year -old red Cadillac and
drive from his Lake Park home to his hotel for eggs
and toast.
Later in the morning he may drive to his office,
in a Boom -time bank building that looks lake an aban-
doned warehouse. Or, he may choose to spend the
morning slouching over coffee and smoking endless
cigarets as he talks with engineers, architects, fore-
men, bright-eyed salesmen, or his own executives.
Half a dozen persons may be sitting about his
table, each with his own mission. Even "con" men are
not tossed out. Crusty MacArthur figures he can
match wits with the best of them.
A single idea made MacArthur wealthy.
In the midst of the Depression of the 1930's,
when millions of people were dropping their insur-
ance • policies because they could not meet the pay-
ments,, MacArthur figured out how to cash in on an
apparently hopeless economic situation.
He offered insurance by mail — the amount a
man could. buy "for the dollar he had in his pocket."
The response was incredible. Competitors were
slow to adopt what to them was an utterly unortho-
dox way of selling insurance, and MacArthur was
immediately on the road to riches.
But MacArthur comes from a family noted for
its ideas. General Douglas MacArthur was a distant
cousin. The late Charles MacArthur — author of
"The Front Page" and husband of Helen Hayes —
was a brother. And MacArthur has another brother,
Alfred, of Chicago, who made his own millions.
Alfred made his in the insurance business too.
John D. MacArthur has been called a genius.
But whatever he has been called — and he has
been, called many things — MacArthur does seem to
have a genius for getting himself involved in activi-
ties that require money.
His tendency to get himself involved brought
him to Florida, where he has investments valued at.
more than $50 million. Some of his investments came
about almost by accident.
Last year, for instance, he signed a note for over
$1 million and wound up with the first mortgage on
the Nassau Harbor Club — a property that he never
wanted.
But MacArthur is like a cat. No matter how he is
dropped, he always lands on his feet.
As it turned out, he can't lose on his Nassau "in
vestment," which is valued at between $3 and $4 mil-
lion.
Everybody knows of his latest involvement — in
the DeLong Ruby case.
A strange side of the DeLong Ruby!` involvement
is MacArthur's complete lack of interest in jewelry.
Why did he get involved?
"The underworld vermin who had the ruby
threatened to throw it into the ocean unless lie got
$25,000 for its return," MacArthur said, slouching in
, a chair in the dining room of his Colonnades Hotel.
300 million.
MacArthur put up the money and the ruby was
delivered to him, by way of a telephone booth at
Palm Beach Gardens, on Sept. 2. He returned it to
the American Museum of Natural History in New
York, from where it had been stolen the year before.
"I felt like a fool, giving that much money to the
underworld vermin," MacArthur said, "but if it helps
to catch the rest of the crumbs involved, then I'll be
satisfied." .
The $25,000 — which MacArthur hopes to "write
off" his income tax as a gift to the museum — was
less to him than is a handful of change to most of us.
Moreover, the ruby affairs brought him a world
of publicity — for his insurance companies; for the
city of his own creation, Palm Beach Gardens, and
for his Colonnades Hotel.
But one MacArthur involvement can easily lead
to another, as happened when he and his wife jour-
neyed to New York where he was honored by the
American Museum of Natural History for his public
service.
As MacArthur was leaving his hotel, in company
with his wife and Helen Hayes, a "kindly looking
man" approached and asked:
"Are you Mr. John D. MacArthur?"
"I can't deny it," MacArthur said, figuring it
was another person who wanted to congratulate him
on recovering the ruby.
"Well, I've got a summons for you," the man
replied, handing it to MacArthur.
It proved to be a summons in a $2 million dam-
age suit filed against MacArthur by a former em-
ploye.
"Hell, I'm always getting sued for something or
other," he said, recalling the incident as he lighted a
fresh cigaret from the stub of the one he had just
smoked.
,"This timeit was by a fellow I fired some time
ago. Claimed his reputation was damaged because I
let him out. Hell, I couldn't have damaged his reputa-
tion. If he'd been any damn gold I wouldn't have
fired him."
MacArthur should be accustomed to litigation.
Few successful men have been involved in more suits
and counter -suits.
"I'm supposed to love litigation," he said, screw-
ing up his deeply lined face. "I'll probably plead guil-
ty. I did enjoy winning when I was young — and I
won a lot of battles.
"Maybe I won so many battles because I tried to
avoid those where I stood a good chance of losing."
He has no reluctance about discussing the count-
less suits in which he has been involved, including
litigation with his wife, the former Catherine Hyland,
in the late 1940's.
"She sued the hell out of me and I sued hers" he
said.
The MacArthurs were divorced in 1948 but subse-
quently remarried. She is a quiet woman with an ex-
plosive laugh, who helped her husband to build his
insurance business.
MacArthur has a son and a daughter by his first
wife, Louise Ingals MacArthur. He has no children by
his second wife, whom he married — the first time
— in 1937.
AC ARTHUR has been investigated count-
less times by the Internal Aevenue Service
— which he refers to as the "Infernal Rev-
enue Service." And he has been accused by the U.S.
Post Office and by the Federal Trade Commission.
"I've been investigated and re -investigated more
times than I can remember — and I've been exonerat-
ed every time," he said. "I think that's a pretty damn
good record. If I had ever committed anything wrong
everybody would know about it."
But he contends that anybody who enjoys sky-
rocketing financial success is subject to investigation
and to lawsuits.
NoV, I, )94
fi
.� `If you're highly successful in a financial way,"
hi said, "people may look at you and say: 'That fel-
low's got to be crooked, to get where he is.' "
.And people will sue you if there's a slim chance
of collecting, he said.
"A lawyer once said to me after he had lost a
suit: `MacArthur, I'm going to sue you every chance
I get. I've got the law of averages on my side. One
day I'll win and you'll pay plenty.'
"I replied: 'Go ahead and sue, you S.O.B.' "
For several years MacArthur engaged in a battle
with state insurance commissioners and competitors.
His biggest suit — for $30 million — was filed
against the late Ed Larson, Florida insurance commis-
sioner, and Zack Cravey, Georgia insurance commis-
sioner.
He charged that the commissioners conspired
with his competitors to throttle -'his insurance busi-
ness -in the two states. He dropped the suit after -at-
taining his goal — freedom for his agents to sell in-
surnce in Florida and Georgia.
"Hell, I liked Ed Larson," he said, recalling the
suit of nearly 15 years ago. "I brought the suit in
self-defense. I learned years ago that the best defense
is an offense."
MacArthur sued an old friend, publicist Carl.
Byoir, for $5 million.
"I did it to make Carl stop libeling me," MacAr-
thur said. "We had been good friends; but when a
deal of his went sour he blamed me for it and proceed-
ed to attack me and my company."
(Byoir was associated with. Ralph Stolkin and
Julius Gaines in the early development of Carol City,.
in Dade County, and in the development of Lake Park
1 in Palm Beach County. MacArthur acquired both
properties, after which he and Gaines engaged in liti-
gation.)
16°-
ECALLING his damage suit against Byoir,
MacArthur winced painfully.
"Hell, I couldn't figure out what got into
Carl," he said. "We had been good friends for years.
Then, all of a sudden, he began attacking. me inlet-
ters to our mutual friends. I figured something was
wrong — and I began investigating. I had one of my
agents get a copy of the hospital records where Carl'
had gone for a physical checkup.
"Sure enough something was wrong: Carl had
cancer. He was going to die and he knew it. But up
until this time nobody knew it but Carl and his
doctor. He hadn't even told his wife."
After Byoir died in 1957, MacArthur dropped his
suit ; but because' it involved a dead man's estate, a
legal ceremony was required.
MacArthur and. Mrs. Grace Byoir met with their
lawyers and he signed papers releasing the Byoir es-
tate from possible damages. Mrs. Byoir's lawyer
turned to her and informed her that she must hand
MacArthur a dollar to complete the legality.
"She opened her purse," MacArthur recalled,
"and took out a one dollar gold piece and handed it to
me."
Recollection of the incident was more touching
than the tough-minded MacArthur wanted to show.
"Hell, I took it home and showed it to my wife,"
he said. "And then's when the trouble started. I had
to scrounge around and find another dollar gold piece
so that she could have a pair of earrings.".
MacArthur entered the insurance business with
his oldest brother„Alfred, in Chicago at the age of
19. Failure to finish grammar school proved to be no
handicap.
.About as crusty then as he is now, MacArthur
soon became a topnotch salesman. He left, his brother
in the 1920's to take a job with another company,
quit it in 1928 to buy the Marquette Life Insurance
Co. for $7,500.
Forming a partnership with Catherine Hyland,
MacArthur turned the office over to her and he went
outside to sell. Together they survived the market
crash of 1929 and the depression that followed.
"But we were just holding our own," MacArthur
recalled.
In 1935 MacArthur purchased Bankers Life and
Casualty Co. for $2,500. It was through Bankers that
he started his mail order business.
"Remember, it was in the depression, and people
just didn't have money to make annual payments o:n
the policies they had taken out in better times," Mac-
Arthur said. "So they began dropping them.
"But everybody wanted some insurance — the
amount they could afford. I figured that if I could
find some way to do business with a person for the
amount of money he had in his pocket a dollar or
two dollars - I could sell him insurance."
But his troubles started as his business skyrock-
eted.
"Insurance commissioners just, couldn't believe
that a company could suddenly start doing such a big
business," he said.
It took MacArthur several years to convince
state insurance commissioners that there was noth-
ing wrong with selling insurance by mail.
MacArthur's Florida activities began 10 years
ago when he took possession of 3,000-acre Carol
City and 3,200 acres in Palm Beach County, including
the town of Lake Park.
"It all happened because I lent Ralph Stolkin a
million dollars ina weak moment," MacArthur said.
"It was getting late at night and I was tired, so I
said: `Aw, hell, I'll let you have the money,' and I
wrote him a check.
"The next thing I knew Ralph was down in Dade
County with Carl Byoir, announcing plans to build
10,000 homes in a place called Stolkin City.
.."But Ralph was getting some bad publicity and
he decided to change the name to Coral City."
(The Miami Herald and The Wall Street Journal
ran series about Stolkin's activities as a punchboard
manufacturer and his involvement in allegedly ques-
tionable charity drives.)
"No sooner than Ralph had changed the name to
Coral City, the city of Coral Gables began raising
hell," MacArthur added. "To avoid a suit, Ralph
changed the name to Carol City."
MacArthur took over Carol City and Lake Park
to recover his loan to Stolkin and one he had subse
quently made to Byoir.
He invested $8 million in Carol City before sell-
ing it to developers Arthur Desser and Harold Gar-
field for $12 million, but later repossessed it after
their plans went sour.
MacArthur concentrated his interest in the devel-
opment of Lake Park, in which he owned 80 per cent
of the vacant lots, as well as more than 2,000 acres of
other north Palm Beach County properties.
When Lake Park officials bucked his plans for
installing water and sewers, he ordered them to va-
caie the municipal buildings, which he owned, then
proceeded to go over their heads to get the backing
of voting residents.
INCE then Lake Park and surrounding
communities have become the fastest grow-
ing part of Palm Beach County.
In 1960 MacArthur started his own unique city,
Palm Beach Gardens. Since then ithas grown from
one squatter to More than 3,000 — and growth contin-
ues rapidly.
MacArthur believes his city is one of the few
ever to start with an industry before the first home was built.
The city's first building permit was issued for an
RCA computer -building plant„ since expanded and
now employing 2,000. MacArthur owns a large block
of RCA stock.
Palm Beach Gardens is national headquarters of
the Professional Golfers Association, with two 36-
Miami Herald SUNDAY=MAGAZYNE'-Sunday,'Nov:`.7;-L965 ;s
Photos by NIXON SMILEY
`You've got to trust people," says John D. MacArthur, who is constantly involved in
suits, deals and money ventures such as ransoming the stolen DeLong Ruby.
rh
ACC #'14
maw
as
z
"I've been investigated and re -inves-
tigated more times than I can re-
member."
"Hell, I'm always getting
something or other."
sued for
"Maybe I won so many battles be-
cause I tried to avoid those where I
stood a good chance of ]losing."
ning in shirt sleeves was the owner?
Like his late brother, Charlie, MacArthur is i
practical joker.
Some months ago when he was to cut a ribbon to
open the new Palm Beach Gardens interchange on the
Sunshine State Parkway, MacArthur unexpectedly
reached for the bright necktie of County Commission-
er E. F. Van Kessel and snapped it in half.
But even Charlie couldn't have matched his prac-
tical joke with five carloads of lettuce some years
E had grown the lettuce on his farm at
Alamosa, Colorado, but after loading it
into refrigerator cars, discovered that the
markets were already glutted with lettuce.
"Who could use a carload of lettuce?" he
thought.
And, running through his mind, 'he came up with
the names of five friends and forwarded the lettuce
to them — writing ahead to let .them know.
One who received a car was Patrick H. Hoy:then
manager of the Sherman and Ambassador hotels in
Chicago.
Hoy, now president of Material Service, a divi-
sion of General Dynamics, •was sitting at the table
when MacArthur related the incident.
"I still remember the shock of getting a carload
of lettuce," Hoy said. "But we disposed of it. We used
some in our hotels and sold the rest."
MacArthur recalled that friends disposed of four
carloads.
"But Clarence Page sent his carload back to me
and damned if I didn't have to pay the freight both
ways," he said.
MacArthur is frequently confused with Dairy-
man J. N. McArthur.
One the night of the last presidential election,
John D. MacArthur was asked to comment on televi-
sion about the trends of the returns, which showed
Johnson leading Goldwater.
MacArthur observed that he was sorry to see
Goldwater losing; that he thought the country need-
ed a change.
The next day he received a letter from a viewer
who informed him that he "would never drink anoth-
er drop of MacArthur dairy milk as long as I live."
MacArthur doesn't care a hang about what peo-
ple think of him, but he regrets that people continue
to confuse him with "that nice man McArthur who
has the dairy."
MacArthur did not acquire all of his Florida
properties merely to protect loans he had m a d e.
Some he acquired ' because "they seemed - like good
deals." An example is the 32,000 acres in Sarasota
County, for which he paid the Edith Ringling estate
in excess of $2 million.
He owns 10,000 acres in Palm Beach County and
over 3,000 acres in Dade County. His latest big acqui-
sition was 10,000-acre Rocket City, near Orlando.
"I took over Rocket City to protect the loan I
had made to the developers," he said.
The loan was for more than a million dollars.
When a New York newspaper reported that he
had bought Rocket City outright, MacArthur was
quick to write a letter of correction.
"They (the developers) defaulted and I am cur-
rently a debtor in possession," he wrote. "I paid off
several defaulted mortgages. I am in the process of
unscrambling the eggs."
He wound up with a first mortgage on the Nas-
sau Harbor Club through an entirely different route.
"I didn't want the club," he said, running a hand
through his thin hair, "and I still don't want it. The
builder, William Jess, was a good friend. He needed
to borrow something over $1.5 million to pay off con-
tractors' liens —and I signed a note."
Jess borrowed money from Chase Manhattan
Bank, paid off the liens, and soon thereafter died of
a heart attack.
The bank brought suit against MacArthur to
collect the loan, plus interest.
"Signing the note may have been unwise; but
how in the hell -could I know that J4a..s would drop
dead.?" he said.
MacArthur paid off the note and took a first
__prigage on the Nassau Harbor Club.
"I didn't mind paying off the note, but I got sore
as hell when I got a bill . from the bank's lawyer for
$32,500 — his fee for putting his name on a few pa-
pers," MacArthur said. -
He promptly wrote to William Ogden of the
Chase Manhattan Bank and expressed his unhappi-
ness over the. bill. In the letter was a veiled threat to
take his insurance companies' business from the -bank
if he had to pay the lawye's fee.
To insure action, he sent a copy of the letter to
David Rockefeller, chairman of the board.
MacArthur is in the process of consolidating his
Florida properties under a single corporation, Royal
American Industries.
Other properties not heretofore- mentioned in-
clude Southern Realty and Utilities Co., with acreage
in Dade, Pinellas and Volusia counties; Fort Pierce
Port and Terminal Co. at Fort Pierce, Radio Station
_WEAT and Telvision Station WEAT-TV in Palm
Beach County, Miami Prefabricators and Florida Avi-
ation, both in Miami. -
Because of his major holdings, he is likely to
forget little items, such as a 354-acre tract . in Surf -
side which he purchased in 1961 for $811,801, and
Layton's Park Trailer Camp at Riviera Beach. "
And, of course, there is the Colonnades, which he
purchased with nearly 1,000 feet of oceanfront for
$675,000. He is now spending twice that amount on a
revamping program which includes rebuilding just
about everything except the hotel's familiar Moorish -
styled columns.
In addition to his farm and ranch in. Colorado, he
owns a tract at Kodiak Island, - Alaska ; the Citizens
Bank and Trust Co., Park Ridge, Ill. ; several pieces
of valuable property in Michigan, and the Wilton
Hotel, Long Beach, Calif.
He owns the Graybar Building in New York —
or maybe it's the lease on the property. He couldn't
remember which.
"I got the Graybar Building in a deal with my
friend, Bill Zeckendorf," he said. "Bill owed me some
money and he paid me off.'
The building, located near Grand Central Station,
stands on one of the most valuable, sites in Manhat-
tan~
Zeckendorf sent MacArthur a handsome Weimar-
aner dog, on which MacArthur promptly pinned the
name Zeckendorf lZ - "because, with his long nose,
he looks exactly like Bill."
How does MacArthur manage such a widespread
empire?
"I've got one hell of a good bunch of people work-
ing for me," he replied.
He believes that 90 per cent of the people you
deal with are honest, sincere, loyaL
"You've got to trust people," he said. "If you go
around biting on quarters to see if they're lead,
you'll wind up with a mouthful of chipped teeth."
eUT a major reason for MacArthur's in-
credible success is plain drive and lots of
guts. He finds it hard to believe that he
can't do something if he wants to.
A few months ago he asked a Fort Lauderdale
engineer if he could raise the roof of an auditorium
at the Colonnades Hotel about 18 inches.
"Impossible," the engineer replied.
"The hell it is," MacArthur remarked.
He called his superintendent, Pat Walsh, who
shaves once a week.
"Pat, I want that roof raised, he ordered. "And
while you're at it you may as well raise it high
enough for another floor."
"Hell, MacArthur, that's going to be a tough
job?'
"Well, if it were going to be an easy one, I'd have
given it to a boy to do."
"OK, MacArthur; we'll do it"
And the 200,000-pound roof was raised high
enoughto add a fourth floor to the three-story build-
ing.
"I don't want any engineer telling me that some -
damn job can't be done," MacArthur said, screwing
up his face as cigaret smoke drifted from his mouth
and nostrils.
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