You think you’re hot today? (Someplace on the Internet it’s hot today. Apologies to our friends in Cape Town and Santiago who are freezing their butts off.) You think you’re careful when it comes to blasting the air conditioner (and thus your electric bill and “the environment”)?

Well, what about John D. MacArthur? MacArthur was the grade-school graduate who paid $2,500 to buy a bankrupt insurance company in 1935 and died a billionaire in 1978 — one of only two American billionaires at the time, as far as I know (the other: reclusive shipping magnate D.K. Ludwig).

He is remembered particularly for the “genius grants” that the MacArthur Foundation awards each year.

How’d he get so rich? Well, for one thing, he refused to spend any money on air conditioning. Reportedly, he was often seen conducting business at the executive offices of Bankers Life & Casualty in the heat of summer wearing just his underwear.

Not a pretty picture.

Of course, frugality alone does not a billionaire make. MacArthur’s own explanation, once: “I’ve been in the right place at the right time . . . It was kind of like the Braille system. I’d stumble around, bump something and make money.”

Meanness and dishonesty played a role, too. Once the company was going to host a Palm Beach week-end extravaganza for its 300 top-performing salesmen of 1961 — all expenses paid. All through the year notices went out to the sales force getting them to compete for this prize. What they were not told is that they’d be staying at MacArthur’s own hotel, the Colonnades, to keep the cost down. In November, when the rooms would have gone empty anyway. But the real surprise came when, after they’d competed all year for the prize and the winners had long since been selected — he just canceled the whole thing. Spend all that money just to reward his 300 top salesmen? (He owned 100% of the company, so it was his money.) No way!

To keep them from quitting, word went out that the cancellation had been made out of a concern for safety — it was around the time of the Cuban missile crisis.

But this was just a trifle. Where the bucks really piled up wasn’t in short-changing his employees, but in shortchanging his customers: collecting premiums against all manner of mishaps but then not paying off.

My favorite story concerned some truly atrocious escape clause he had inserted into the middle of a dense insurance policy. The only way anyone would ever become aware of this needle in a haystack of fine print was when the company pointed to it to decline a claim. The Illinois Insurance Department, alerted to these callous dealings, insisted that, at the least, this egregious clause be printed in 10-point type, to stand out. MacArthur complied by printing the entire policy in 10-point type.

“The darkest day in insurance history,” said his brother Charles, president of a more respectable insurance company, “was when my brother entered the business.”

Not a pretty picture, either — though no reason, I should think, if you happen to be awarded a MacArthur grant yourself, to turn it down.

Have a happy and not too hot July 4th weekend!


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