VOLCKER, PAUL A(DOLPH)

born Sept. 5, 1927, Cape May, N.J., U.S. American economist and banker who, as chairman of the board of governors of the Federal Reserve System (197987), played a key role in stabilizing the American economy during the 1980s. Volcker graduated from Princeton University in 1949 and received an M.A. from Harvard University in 1951. He worked as an economist for the Federal Reserve Bank of New York (195357) and for the Chase Manhattan Bank (195761), was a deputy undersecretary in the Department of the Treasury (196365), and was a vice-president of Chase Manhattan Bank (196568). As undersecretary for monetary affairs in the Treasury Department from 1969 to 1974, Volcker was the chief architect of the United States' abandonment of the gold standard and the devaluations of the U.S. dollar in 1971 and 1973. Volcker served as president of the Federal Reserve Bank of New York from 1975 to 1979, and in the latter year President Jimmy Carter appointed him to head the Federal Reserve System at a time when inflation in the United States had reached a high of almost 13 percent. Volcker was determined to end chronic high inflation, and under his leadership the Federal Reserve slowed the rapid growth of the money supply and allowed interest rates to rise. These policies caused the most severe recession (198283) in the United States since the Great Depression, but inflation was brought firmly under control and thenceforth remained low. Volcker was reappointed to a second four-year term in 1983 and continued his widely praised performance as manager of the money supply and controller of inflation. He declined to accept reappointment to a third term in 1987 and subsequently taught economics at Princeton University and worked as an investment banker.