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~ Inducted 1990
The 1960s and 70s were grim years for the Rhode Island economy. Traditional and old-time industries and companies were leaving or closing. Organic economic growth was nil. Governor Phil Noel's surprise success in bringing submarine construction work from a Connecticut shipyard to abandoned U.S. Navy property at Quonset Point was a rare and much celebrated triumph.
One major problem was finding bank financing for any new business or industrial initiative. The federal prohibition against interstate branch banking had dire effects on the banks in the smallest state in the union. Rhode Island banks, small and undercapitalized, were barely able to meet the costs of advancing technology, marketing and increasing regulation. Bank funding for aggressive new ventures was pretty much out of the question. Budding entrepreneurs, faced with having to give up control of their businesses by selling equity to raise working capital were going elsewhere—where bank loans were available.
But help was on the horizon. With assets of about $1 billion, Industrial National Bank in Providence was modestly sized but headed up by a CEO who thought big. John Cummings, Jr. had long been working on overcoming the interstate banking ban. He would not live to see the ban lifted. But some years before he had made an inspired choice of a successor who would modernize banking in Rhode Island, New England and beyond.
Terrence Murray was born and raised in a working class family in Woonsocket. His dad, who advised him to work like an Irishman but think like a Scotsman, was a purchasing agent for U.S. Rubber and his mom the switchboard operator at the City Hall. He graduated from Providence Country Day School and Harvard where he had majored in English, and then, already married and with two children, he joined Industrial National as a trainee in 1962.
His meteoric rise in the organization was not immediate. For some years he worked inconspicuously as a mortgage lender, speculating in real estate on the side to supplement his modest salary. When Cummings found out about this speculation, Murray expected to be fired. Instead, impressed by his entrepreneurial spirit, Cummings promoted him to head up the bank's real estate portfolio. That led to Murray's putting together complex deals, particularly bailing out struggling real estate projects. In the early 1980s cancer tragically ended Cummings' career prematurely. Upon his death in 1982, the 42-year-old Murray became CEO.
The promotion came at an opportune time for someone of Murray's interests, abilities and energy. If Cummings were the pioneer in Rhode Island's battle against the interstate banking ban, Murraysucceded in getting the job done. “We had to have the opportunity to branch or purchase outside of Rhode Island because we were just too constrained,” he notes. “This isn't California. In a geographic area just 30 by 60 miles, banks could squeak by if they stayed conservative and stuck to providing home mortgages and car loans. But, particularly with no organic growth in the area, they couldn't support the growing requirements of modern banking--the enormous consolidation of processing centers, marketing budgets and treasury functions.”
So he began lobbying the individual state legislatures in New England in what, in 1983, was to become the New England Compact. “Over a couple of years we were successful in getting legislation passed in New England states allowing banks to cross state lines,” says Murray, who is described as the force behind the Compact. “In every state the local bankers had to be in support of it. They, of course, knew the legislators. But I helped generate the energy behind it. And in Rhode Island, Connecticut and Massachusetts I dealt directly with the legislature leaderships. In New Hampshire and Maine, it was done mostly by the indigenous banks' CEOs.”
When the New England Compact was established Fleet immediately began buying banks outside of Rhode Island. Murray led the acquisition all of the large banks in New England—two in Hartford, two in Rhode Island and four in Boston. When national restrictions were relaxed he went on to buy banks in upstate New York, the biggest bank in New Jersey and then on to banks in New York City. The last and biggest of the acquisitions was the Bank of Boston in 2000 by which time Industrial National had transitioned into the Fleet Financial Group and had grown into the $200 billion Fleet Boston Financial Group.
“We had a great run,” he remembers. The consequences of remaining small were visited on many Rhode Island banks when recession hit in the early 1990s. “Many banks failed due to bad loans and other problems,” he says. “The FDIC took them over, and we bought up a lot of them. The biggest being the Bank of New England, which was the biggest bank failure in history up to the time. We bought it from the FDIC in 1991. Others could see the handwriting on the wall and there was massive consolidation.” When Murray assumed the Chief Executive position in 1982, the company's market capitalization was just under $250 million. At his retirement in 2003, the number was $48 billion. Successful as he was in leading Rhode Island and New England banking into the financial future, he deeply regrets the failure of what he still regards as a promising chance to modernize the Rhode Island economy. The Greenhouse Compact was the first comprehensive state industrial policy plan ever proposed in the U.S.
A complex $250 million package of bond issues, tax credits, grants, loans and job training programs, the plan was dubbed the Greenhouse Compact because of the 'greenhouses' it would establish to try to nurture new industries in such promising fields as robotics, gerontology and thin-film technology.
Just two years after becoming the Industrial National CEO Murray was appointed to chair the Strategic Development Commission by then-Governor J. Joseph Garrahy. Intended to generate wide appeal in promoting the plan, the 18 members of the Commission were drawn from business, labor, education and elected officials.
The 1,100 page Greenhouse report had been authored by Ira Magaziner, a 36-year old Brown University graduate who had gone on to establish Telesis Inc., a strategic consulting firm that has worked on industrial policy issues for Japan, Sweden and Ireland and also has consulted for domestic companies such as General Electric. Although Magaziner was originally from New York, his commitment to his college town is such that Telesis - which has offices in Paris and Melbourne - was based in Providence. Magaziner, like all of the members of the Commission, were unpaid volunteers. For eight months leading up to a state referendum on the Compact, Magaziner and Commission members made some 800 presentation promoting the plan throughout the state, talking to workers, knitting groups, grange groups, high school groups, senior citizens groups and anyone else who would listen. There were television debates, bumper stickers, almost-daily local newspaper analyses.
'We have a brain drain in Rhode Island,” Murray told the workers on one factory floor. “Your children, my children, upon graduation from school leave Rhode Island. Once they get out of school, and only one in three or four has the opportunity to get a job here that fits their education and skills. Rhode Island's average manufacturing wage ranks 48th among the 50 states. The problem is, more than half our jobs are in industries that are declining.' But opposition was strong, with many workers either not understanding the plan or worried about potential costs. And, ironically, there was vociferous criticism from the economics department at Brown, where laissez faire professors railed against government intervention in the industrial economy.
'If we lose, this state is dead in the water,' Murray said the day before the referendum. And they did lose, by a discouraging four-to-one margin.
More than three decades later, he still feels the pain of that defeat and worries about the state's still struggling economy. But he is not without hope, noting that some of current Governor Gina Raimondo's plans include Greenhouse Compact recommendations.
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