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Murphy's romance.


The story has been repeated so many times among Arkansas business people that most think it is apocryphal.

Charles H. Murphy Jr. confirms, however, that the story is true.

The setting was an early meeting of the Arkansas Business Council, the group of prominent businessmen better known as the Good Suit Club.

Sam Walton, the Business Council's first chairman, and Murphy, the current chairman, were arguing a point.

"I don't even remember what we were discussing," Murphy says. "All I know is that I finally spoke up and said, |Listen, Sam, you're richer than I am, but I've been richer longer.'"

Murphy laughs as he tells the story. It is a Friday morning, and the chairman of Murphy Oil Corp. is relaxing on a couch in his spacious office, which overlooks downtown El Dorado.

He's wearing his trademark bow tie, and chewing on an unlit cigar. Murphy looks very much like a college linguistics professor or an economist. Indeed, he lists two of his hobbies as the study of linguistics and economics.

But Murphy, 71, isn't a professor or an economist. He's a businessman - a very successful one. And although he's not as rich as Sam Walton, Murphy won't be on the public dole anytime soon.

Murphy Oil - with worldwide operations in petroleum exploration, production, refining and wholesale and retail sales; contract drilling; farming; timber and land management; lumber manufacturing; and real estate development - had 1990 revenues of $2.1 billion, up from each of the two previous years.

The company's 1990 net income was $114 million, the best overall result since 1983.

And, yes, Charles Murphy has been richer a lot longer than Sam Walton. When Walton was operating that Ben Franklin store at Newport, Murphy already was the veteran head of what for years was Arkansas' only Fortune 500 company.

"The meetings of the Business Council have been very collegial," Murphy says. "There has been no posturing at all. That's the only time I can remember disagreeing with Sam."

The incident, though, magnifies a Murphy trait - an outspokenness that is tempered by his sense of humor.

The Outspoken One

Murphy's so outspoken that he made headlines in 1974 when he went on a national television news program and said there was no energy crisis. At a time when representatives of the large oil companies would not dare appear on "60 Minutes" to defend the industry, Murphy willingly did so.

"The crisis is political," he said at the time. "Worldwide crude oil reserves have continued to go up. In 1973, there was enough oil, even without other discoveries, to last us well into the 1980s. The crisis, as it is perceived by the public, the politicians and the press, is really the sudden rise in prices that occurred when the cartel made its move. The price increase was unusual only in its suddenness."

Murphy's so outspoken that he once went on PBS and debated then Sen. Walter Mondale, D-Minn., on the issue of price controls.

Murphy's so outspoken that he debated the man who was then chairman of the British National Oil Corp., Lord Kearton, in Geneva, Switzerland, on the role of national oil companies.

Murphy's so outspoken that the wife of Arnold Toynbee, the famous English historian who died in 1975, once introduced Murphy as the only man who ever changed her husband's mind.

Charles Murphy has spoken all over the world. In his audiences have been OPEC oil ministers and the heads of major oil companies. He also has argued with both Republican and Democratic administrations, claiming that if they would decontrol prices, oil company profits eventually would come under severe pressure.

This is a man who unabashedly supports a complete free-market economy and detests what he considers excessive government regulation of business. That sounds like a Republican profile, but Murphy describes himself as a "card-carrying Democrat" who is liberal on social issues and conservative on economic issues.

He calls on the government "to have the courage to let the market do its work" and says that if price controls on petroleum products had been removed in the 1970s, the subsequent increases in prices would have encouraged both conservation and the development of alternative energy supplies.

Murphy's outspokenness is not limited to national economic issues. He cares deeply about Arkansas and its future, having begun traveling with his father at age 12 to the towns and crossroads communities of south Arkansas.

A Missed Generation

"There was a missed generation in our family," Murphy says.

Charles H. Murphy Sr. was age 50 when his son was born in March 1920. The elder Murphy had made a name for himself years earlier in establishing a political machine in Union Parish, Louisiana, just south of the Arkansas border.

Charles Murphy Sr. was elected sheriff when he was in his 20s, running on a platform of cleaning up what at the time was recognized as one of Louisiana's most corrupt parishes. At the end of his second term, Murphy decided to get out of politics, move to Arkansas and go into business.

"Union Parish produced some remarkable people," his son says. "Of those in his organization, one went on to become governor of Louisiana, another went on to become a U.S. senator from Louisiana and a third went on to become governor of Arkansas [George Donaghey]."

Charles Murphy Sr. gravitated toward the banking business and later used the proceeds from the sale of several banks to build a lumber company. Oil would not be found in Arkansas until 1921, but it had been discovered in northern Louisiana, and Murphy was convinced that if he would buy land in south Arkansas, much of that land would produce oil.

The gamble paid off.

By the time his son was 12, Charles Murphy Sr. had tracts of land producing timber and oil all over Arkansas and Louisiana.

"He would take me out of school and allow me to travel with him for several days at a time," Charles Murphy Jr. says of his father.

In addition to teaching his son about the timber and oil businesses, the elder Murphy initiated discussions about history, politics and literature.

"On my 12th birthday, my father gave me a six-volume biography of John Marshall [chief justice of the Supreme Court from 1801-35]," Murphy says. "In his mind, he had an idea of how far along he thought I should be when reading those books, and he would ask me questions. I would go home and read like mad at night in order to reach the point where he believed I should be."

Soon after Murphy turned 21 in 1941, his father suffered a stroke, forcing the son to take over what already was a sizable company. Suddenly, every bit of knowledge gained during the previous decade while on those rides through the piney woods and red clay hills of south Arkansas and north Louisiana was needed.

Murphy served in the armed forces for three years during World War II, returning to El Dorado in 1946 to begin expanding and diversifying the company his father had built. The various family holdings were incorporated in 1950. In 1956, Murphy Oil held its first public sale of stock.

International Expansion

Prior to World War II, the company's oil production was limited to Arkansas, Louisiana and Texas. Following the war, Murphy Oil expanded its operations into the western United States and western Canada.

Last year, in addition to the United States and Canada, exploration and production took place in Ecuador, the United Kingdom (Murphy Oil has a 10 percent interest in the Ninian field, one of the largest oil fields in the North Sea), Spain and Gabon.

Even though he was spending much of his time out of the state in the three decades following the war, Murphy did not ignore Arkansas public affairs. He spent 17 years on the state Board of Higher Education and 10 years as a trustee of Hendrix College at Conway.

In the wake of the Supreme Court's landmark Brown vs. Board of Education of Topeka, Kan., decision in 1954, Murphy began to speak out on the issue of civil rights. His message was one that some white businessmen in Arkansas and Louisiana didn't want to hear.

Did Murphy receive pressure because of his views?

"There was never a cross burned in my yard, if that's what you mean," Murphy says. "Yet I'll never forget the day a former high school classmate stopped me at a coffee shop in downtown El Dorado. He told me, |It's easy for you to say that kind of stuff. You're rich. You can send your kids to private schools where there aren't any blacks. I can't afford to do that.'"

Murphy said the comment made him so mad that he went home and told his wife that their three sons and one daughter would remain in the public schools at El Dorado. They did.

As a member of the Board of Higher Education, Murphy also pushed for the rapid integration of the state's colleges and universities. His most publicized speech on the subject came in 1962 during a Washington meeting of the Arkansas State Chamber of Commerce.

The New York Times ran a story on the speech, and Murphy says he "accumulated quite a little file of congratulatory letters."

With integration a reality, Murphy has turned his sights to other controversial issues - the deficit spending of college athletic programs, the length of the school year and school consolidation, to name just three.

Tax Increases

During the recent legislative session, Murphy and the other members of the Good Suit Club were leading supporters of an increase in the state sales tax to fund teacher salary increases and an increase in the state corporate income tax to revamp the vocational-technical education system.

"Legislators lived up to their end of the bargain by approving the tax increases," Murphy says. "The big question now is if the educators will live up to their end of the bargain. I don't think people mind paying these taxes, but in return they'll demand that our schools teach not only the three Rs, but also physics, chemistry and advanced algebra. Mind you, I said teach, not offer."

The Business Council released two major reports on education in 1988. "Rise To Excellence" dealt with higher education and was made public in March of that year. Six months later, a more comprehensive set of recommendations for educational reform at all levels, "In Pursuit of Excellence," was released.

"When we were putting together those reports, teachers' groups and administrators' groups asked to meet with us," Murphy says. "That was fine. What we found was that we weren't speaking the same language. They said, |Oh, we already offer those courses.'

"But we were talking about requiring students to be in those courses and seeing to it that they learn the subject matter. It's up to the taxpayers to demand that this be done."

Murphy loves to quote education figures from Japan:

* 63 percent of Japanese 4-year-olds attend school, compared with 32 percent of American 4-year-olds;

* Japanese children average two hours of homework per day, compared with 30 minutes for American children;

* Japanese schools have a daily absentee rate of less than 1 percent, compared with 9 percent in American schools;

* Japanese high schools require three years of math instead of the one-year requirement of most American high schools;

* Japanese schools require six years of a foreign language, compared with no such requirements in most American schools.

Japanese children, Murphy notes, attend school 50 days more per year than American children, meaning that by high school graduation, they've had more than three years of school than their U.S. counterparts.

"Why did we establish the nine-month school year?" Murphy asks. "So kids could go out and chop cotton in the summer. We don't need them chopping cotton anymore."

On the issue of college athletics, Murphy is quick to call University of Arkansas Athletic Director Frank Broyles "a friend."

But he's just as quick to note that the athletic program's critics "are on solid ground. Major-college athletic departments arrogantly believe the rules don't apply to them."

While Arkansas' athletic program is self-supporting, Murphy points out that programs at other state colleges and universities run deficits, utilizing funds that could go toward academics.

A Realist

Murphy describes himself as a realist, a man who realizes that things that are worthwhile take time to complete. Changes in college athletics and the length of the school year won't come overnight.

"Looking back, what we considered a failure in the 1989 legislative session wasn't an outright failure," Murphy says of the General Assembly's refusal to approve tax increases for education two years ago. "It wasn't a failure because it paved the way for this year's successes. We planted the idea of having to pay for educational improvements in legislators' minds, and that idea began to ferment."

It didn't hurt, Murphy says, that Gov. Bill Clinton received 57 percent of the vote in his landslide November victory over Sheffield Nelson.

"The voters were given a clear choice," Murphy says. "They had somebody who said we might have to pay for quality in education running against a man who was basically saying we should remain static. That election represented a mandate, as did the selection of a number of progressive new legislators."

As an example of a legislator in whose mind the idea of tax increases "fermented" between 1989 and 1991, Murphy singles out Rep. Bobby G. Newman of Smackover.

"Bobby was dead set against tax increases in 1989," Murphy says. "This time, he was heartily in favor of increases. I give Bobby credit for being an astute politician. He saw the direction in which public opinion was moving."

The Business Council's executive director, Archie Schaffer, will leave his job this summer to handle political and public relations for Tyson Foods Inc., where he will replace the retiring Bob Justice. Schaffer's impending departure and the fact that legislative victories were achieved this winter lead to speculation that the Good Suit Club will disband.

Murphy makes no promises, but he doesn't believe that will happen.

"The program we have outlined is a long-term one by its very nature," he says. "When Sam Walton stepped down, I agreed to serve as chairman for one year. I have been at it longer that that. I thought Don Tyson might take my place, but I understand Don's need to be in Europe increasing his company's sales. I spent a big part of my time abroad in the 1960s, so I know how tiring that can be.

"I've asked Archie to attempt to achieve 100 percent attendance at our next meeting. If we decide at that meeting to go into what I call a surveillance mode, I could remain as chairman, and we might be able to get by without hiring a replacement for Archie. Don has promised me that Archie will be at our disposal when we need his help, so he's not abandoning us.

"If, on the other hand, we decide to be more active, we'll need a new full-time executive director and a younger, more vigorous chairman. I'm not sure what we'll do. The purpose of these meetings is to hear what others think. I can assure you there is no smugness on anybody's part. We know we're a long way from having accomplished what we set out to do."

Speaking His Mind

No matter what happens to the Good Suit Club, Murphy says that as long as he's still speaking, he'll be speaking his mind. An example of that is his stand on the political football that is school consolidation.

"We're going to have to pass a constitutional amendment," he says. "You'll never get a meaningful consolidation bill through the Legislature. It's so much easier to defeat things than it is to pass them in that body.

"It is important that people know we're not talking about doing away with neighborhood elementary schools. What we're talking about is making our 16-year-old, who already has a car, possibly drive an extra 10 miles to high school so he can take physics."

Murphy says that following the tough decade of the 1980s - tough for the oil business, tough for the timber business and tough for south Arkansas - he is optimistic.

He is optimistic about Murphy Oil Corp. - "In the summer of 1941, we began negotiations with a Scottish company to buy 42,000 of bottomlands in Louisiana," Murphy remembers. "The British exchequer had asked all British nationals to exchange their holdings around the world for cash in order to help the war cause. We were to close the deal on Dec. 10. Three days before that, the Japanese attacked Pearl Harbor, and the United States entered the war.

"The lawyers told my father that because the war had begun, we had a right to cancel the agreement. He replied that the war was regrettable but predictable, and that we would not let it stand in the way of business. And we never let it stand in the way of business. That's been my philosophy. We have tried not to let this recession stand in the way of business."

He is optimistic about Arkansas - "The people of this state have developed a knack for selecting good men to lead them in Congress and represent them as governor. Also, we're home to companies that are generating a great deal of capital. Look at Tyson, Acxiom, Wal-Mart, Dillard's. We were the lone Fortune 500 company in Arkansas for years. That listing only includes industrial concerns. If you look at the Forbes 1,000, which also includes sales, you will see several Arkansas companies.

"Look at our natural resources. Look at the forests and the huge forest products plants we have in this state. Look at our water resources."

Sam Walton may be richer, but Charles Murphy - the one who has been richer longer - is certainly the more talkative of the two.

"Thanks for allowing an old man to ramble," Murphy says as he heads out of his office on the way to lunch.

The chairman of the Good Suit Club is smiling. He knows that the visitor thinks his rambling days are far in the future. As has been the case for almost five decades now, when Charles Murphy talks, Arkansans listen.

PHOTO : NOT LACKING FOR WORDS: Charles H. Murphy Jr., 71, has gained a reputation through the the years for speaking his mind. For instance, he believes there are too many school districts in Arkansas, the school year is too short and college athletic programs spend too much money. Murphy is chairman of Murphy Oil Corp. at El Dorado and chairman of the Arkansas Business Council.
COPYRIGHT 1991 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:includes related articles; Murphy Oil Corp. chairman Charles H. Murphy Jr.'s commitment to the oil business
Author:Nelson, Rex
Publication:Arkansas Business
Article Type:Biography
Date:Apr 22, 1991
Previous Article:Betting on act 12.
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