Thrift may not be as much fun as Paul Volcker’s grin would indicate, but the 52-year-old economist understands better than most how necessary it is. In July he was elevated from the presidency of the Federal Reserve Bank of New York to boss of the whole Federal Reserve system. In personal monetary terms it was a curious promotion: His salary fell from $116,000 to $60,700.
The move also meant giving up a comfortable, quiet job for one of maximum visibility—and flack. As Fed chairman he must orchestrate the central bank’s control over the money supply, which affects interest rates, in an effort to curb double-digit inflation. Moreover, he must do it without crippling the economy. Volcker concedes he was less than eager to accept the post, but he is not a man who turns down presidential requests. “When you’re asked to do it,” he says simply, “you do it.”
As a crusader for national frugality, Volcker’s own habits are exemplary. He has a preference for recycled suits (a 27-year-old pair of trousers was lately restored to further service). He smokes 20-cent cigars (“Of course,” says a close friend, “a lot of us take pity and give him better ones”). A bemused Volcker protests that he is “not some great Scrooge—there are savers and there are spenders, and in our family my wife’s the spender.” Barbara Volcker more or less concurs. When her husband is preoccupied, “I say I bought a fur coat for $9,000,” she confides with a smile. “That gets his attention.”
Nowadays the Volcker family is spread between two cities. Barbara and son Jim, 21, remain in New York. She has gone back to work as an accountant to balance the family budget and admits, “We eat a lot of hamburger.” Daughter Janice, 24, is a nurse in Washington (and part-time maid for her father’s small D.C. apartment). Volcker commutes back and forth on the shuttle, though the cramped seating is hard on his 6’7″ frame. Princeton-and Harvard-educated, he has worked in the capital before, serving in the Treasury Department during the Kennedy and Nixon eras.
His tight money policy has driven interest rates to record heights, but Volcker firmly believes he is on the right course (so far President Carter agrees). Reflecting on a cartoon showing “a tiger called ‘inflation’ and the Board and me pulling on its tail trying to get it into a tiny cage,” Volcker declares: “I’d like to think I’ll soon have that tiger by the throat.”