Paul Volcker- a civil servant’s civil servant
“But at root, Paul was a public servant — someone who truly believed in the honor of serving others. His scorn was reserved solely for those who corrupted institutions or put their own selfish interests above the good of society. “— Christine Harper
Yes indeed Paul Volcker was the public servant’s public servant.
Important as those events were in shaping my life, they aren’t the reason I decided to write this memoir. I’m driven by a growing, and much broader, concern. We have for some time been experiencing a breakdown in the effective governance of the United States.
Polarization between (and even within) political parties, accompanied by the ever-growing influence of highly concentrated wealth, has paralyzed key elements of public policymaking: prudent budgeting able to finance programs ranging from our military services to old-age retirement; sensible strategies for international affairs, immigration policy, health care, and much more. Even needs as self-evident as rebuilding our infrastructure seem, for all the talk, beyond our capacity for action.
Less understood is the erosion in what Alexander Hamilton insisted at the very beginnings of the republic would be the true test of government: “its aptitude and tendency to produce a good administration.” There has been a lack of attention for years to the need for effective governmental organizations staffed by talented, dedicated public servants. The result has been too many breakdowns, too little efficiency, and, most critically, too much distrust of government itself.
— Volcker, Paul A.. Keeping At It: The Quest for Sound Money and Good Government
I first met Paul in 1991 just after I joined the Bank of England. During one of his frequent visits to London (where he’d studied at the London School of Economics) he asked Marjorie Deane of The Economist to arrange a dinner. At the end of the evening Paul, as host, was determined to pay the bill. But he carried neither cash nor cards, only a check book — and dollar checks at that. Unfortunately, the restaurant wouldn’t accept a dollar payment, so I paid with a sterling credit card and Paul gave me a U.S. check. This suited me fine because as a new recruit I’d just applied for an account at the Bank of England and been asked, rather sniffily, how I intended to open it. What better way than by depositing a check from the celebrated former chairman of the Federal Reserve?
I luxuriated in this coup for two weeks. Then I received a letter from the chief cashier’s office saying the check had bounced. It turned out that Paul had forgotten to date it. Should I write — to Paul Volcker, for heaven’s sake — pointing out that his check had bounced, or just accept the loss? After some thought, I hit upon the solution, and sufficient time has passed, I hope, for me to say what it was without fear of prosecution. I dated the check myself and returned it to the Bank of England, where it was accepted without question. The episode taught me a lifelong lesson: To be effective, regulation should focus on substance not form.
As Paul described in his memoir, Keeping At It, personal friendships in the international monetary arena greatly facilitated the system’s operation — something I came to see for myself. For Paul, the dismantling of the Bretton Woods system of fixed exchange rates (an inevitable break-up, given the differences between the domestic policies of participating nations) was a “searing experience.” America’s unilateral action put friendships abroad under strain, but behind the scenes during those dark days of tariffs and wage and price controls, Paul maintained relationships that soothed the feelings of betrayal.
Mr. Volcker was a civil servant’s civil servant. At the Treasury Department in the Kennedy, Johnson and Nixon years, he toiled at rethinking an international monetary system that was breaking down.
Despite jobs at the epicenter of world financial power — early in his career he worked at Chase Manhattan, and he would lead the Federal Reserve Bank of New York before Mr. Carter picked him as Fed chair — he seemed uninterested in the trappings of wealth and power.