Curtis Kelly, a local detective, knew the visitor from Washington was someone special--he had been assigned to guard him tonight.
Henry Schofield, the man drinking coffee with Kelly knew that, too. The local news called their visitor "the second powerfulest man in the U.S., as far as interest rates and the economy go," said Schofield.
Most of Mayfield, a God-fearing town of something over 11,000 in Kentucky's Bible Belt, seemed to stop today to take notice of the arrival of Paul A. Volcker, chairman of the Federal Reserve Board, who accepted a congressman's invitation to speak to the townspeople and answer their questions at the local high school.
Although they couldn't all explain the exact process, most of those in Mayfield who talked to reporters today understand that Volcker and the board he heads are the starting point for a chain of decisions that influence powerfully the interest rates they pay.
The message for Volcker from Mayfield was that interest rates need to come down, although many people here seemed sympathetic to the difficulties of the Federal Reserve in lowering them.
"From our perspective down here, we think the economic recession is the main problem to be coped with," said local bank president William L. Hale III.
Mayfield, tucked in the far western corner of Kentucky not far from the Mississippi River, is surrounded by some of the richest farm land in the state, according to Mayor Virgil Gilliam. Some farmers are doing better this year than last, said local feed-mill merchant Richard Howe. "The prices of hogs are high" and dairy products are also bringing good prices.
But unemployment is 13 1/2 percent and the farmers raising corn and soybeans are in trouble. High interest rates have made "farmers suffer quite a bit," said Bill Green, the federal farm extension agent and president of Mayfield's Chamber of Commerce.
"From our perspective down here, we think the economic recession is the main problem to be coped with," said banker Hale.
"I can't really say it's anybody's fault in particular," said Schofield, a truck driver and dairy farmer. But he added, "I tell you, these interest rates just about put me out of business."
The Federal Reserve Board chairman acknowledged to his Mayfield audience tonight that economic conditions now are "not too good," but he told the 1,500 or so people who came to hear him in the cavernous school hall, which doubles as a basketball court, "We shouldn't have thought that slowing inflation was going to be any easy, magical process." He said that lower interest rates could only come with a lasting decline in inflation, and added that he thought there were now real signs of progress against inflation.
Despite the down-home atmosphere in the school hall--where Volcker was welcomed with a rendering of Old Kentucky Home and the National Anthem by a high school band and a version of Battle Hymn of the Republic sung by another local high school choir, many of the questions touched on technical matters of international finance and monetary control.
A round of applause greeted the suggestion of Robert Phillips that there should be a return to the gold standard.
John Binkley, a senior at Marshall County High School, asked Volcker "Who actually holds the check on you?"
Volcker replied, "Congress created us and they can un-create us."
He told his audience he believed there was no choice but to fight inflation and that he rejected the notion that the Fed can closely control the level of interest rates. He reminded them that interest rates this week rose after the Fed's latest cut in the discount rate, rather than falling, as might be expected.
A commanding presence at 6 feet 7, Volcker had suggested in an interview earlier that, despite appearances, he does not have the economy under his thumb. "There's this feeling that somehow if we press the right button, everything will go just fine . . . it's obviously not that simple."
Mayfield seemed honored and pleased that Volcker accepted the invitation of Rep. Carroll Hubbard--the McDonald's sign said "Welcome to Mayfield Paul." But some townspeople allowed that Volcker could learn something from them.
"It's nothing short of amazing to have Paul Volcker here in Mayfield," commented Howe. But "if he doesn't have a little manure on his shoes already, he ought to," Howe added. "I highly recommend it" for Washington officials who want to know what's going on in grass-roots America," he said.
Local merchant James H. (Buddy) Tankersley, who also works with the local chamber of commerce to attract industry to the area, said yesterday, "the overall economy is our worst enemy" in winning new firms to Mayfield. "It can be a baffling endeavor" to try to sell the city to companies that, in turn, are waiting for a national economic recovery. Tankersley and other businessmen think that interest rates have to decline further before consumers will start to buy houses and autos again, and farmers will be able to improve their financial position.
Green did not fault Volcker and the Federal Reserve for pushing interest rates up to fight inflation. "In my personal view, the Federal Reserve Board did what they had to do. They did what Congress and the politicians wouldn't do, and bit the bullet" of fighting inflation, he said. But, he added, farmers now feel "they've just about chewed this bullet up and spit it out."
It is not that people in Mayfield like inflation. This is a deeply conservative neighborhood, where the sale of alcohol is forbidden and the dislike of big government and the "gyrations of dialogue and rhetoric" in Washington runs deep, said Tankersley. But he added, unless Washington officials listen a little more to Middle America, their anti-inflation rate policies "could have the country gagging and nearly choking."