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Always a smoker, Paul Volcker in 1980. You can see the dime-store cigars in his hankie pocket. |
Paul Volcker died on Sunday. A few will remember him as chairman of the Federal Reserve under presidents Jimmy Carter and Ronald Reagan.
Fewer still will remember him as a Plainfielder, but indeed he was.
Born in Cape May in 1927, where his father was the city manager, he grew up in Teaneck, where his father had been lured to save the town from bankruptcy.
His father's sense of public service led him to consider public service the highest good in his life.
A graduate of Princeton, he combined an interest in economy, history and public administration.
In the early 1950s he returned from the London School of Economics, where he had studied on a Rotary scholarship, and went to work as a staff economist for the New York Federal Reserve Bank.
Always frugal -- and notorious for his dime-store cigars and ill-fitting ready-to-wear suits (he was 6-foot-7) -- it seems likely that Volcker and his new wife Barbara Bahnson came to Plainfield after getting married in 1954.
In line with his reputation as unostentatious, the Volckers did not pick one of Plainfield's leafy historic areas or a tony street with the up-and-coming, but instead settled for a modest new home on what was then a raw-looking Carnegie Avenue. 912 to be exact.
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The house at 912 Carnegie Avenue where the Volckers lived from 1956-1962. |
One anecdote told of him -- and it may well fit with his time in Plainfield -- is that when the front seat in his old Nash Rambler gave out, he removed it and replaced it with a wooden chair whose legs had been cut down.
It was probably here at Muhlenberg Hospital that their children and Janice and James were born, and they may have attended Evergreen School for a few years before the family relocated to Washington, DC, in 1962 when he joined the administration of John. F. Kennedy.
Paul Volcker is most remembered for his shock therapy to get inflation under control. Under pressure from the oil crisis of the early 1970s, by 1979 inflation in the U.S. had reached 1% per month (we now get palpitations if it exceeds 2% per year!) -- or more than 12% per year.
President Jimmy Carter offered him the job at the Fed in 1979 and the first thing he did was announce an all-out war on inflation, which was destroying the value of the U.S. dollar.
But instead of manipulating interest rates as was the expected maneuver, Volcker decided to limit the amount of money in circulation, allowing the market to set interest rates on its own.
Within a short time, interest rates had risen to more than 21% on mortgages and auto loans. (Memories of selling homes in this market were still coin of the realm among veteran realtors when I began my real estate career in 1986.)
Though the recession this brought on probably cost Jimmy Carter a second term, Volcker was kept on by Ronald Reagan until 1987, at which point he retired. Within two years the runaway inflation had been brought under control.
He was brought back by President Barack Obama to deal with the economic meltdown of 2008 and once again recommended strong medicine. Relations with Obama's advisers -- mostly Clinton-era deregulation advocates -- were tepid at best.
Under pressure from Congressional Democrats on the Obama administration, we have him to thank for the 'Volcker Rule' announced by Obama in January, 2010.
This rule prevents banks from making investments only to increase their bottom line, instead of benefiting their customers. Banks have never been happy with the rule, and President Trump has signaled he wants to dismantle it.
Pretty heady stuff for someone who lived in our quiet little community.
He was literally a giant among men, and before we are finished with Donald Trump I think we will rue the loss of Paul Volcker.
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