The Old Gray Lady of Fourteenth Street is trying to polish her image - and strengthen her influence - in the Carter administration.

The Commerce Department, which has had the dubious distinction since the Hoover era of being the most notorious backwater in the Cabinet, is steering a new course under the leadership of Secretary Juanita M. Kreps.

While her goals of reorganizing the department to channel its impressive manpower into more effective programs while increasing Commerce's role in developing national economic policy are admirable, they are characterized as unrealistic by critics - especially those in the Treasury Department and the Office of Management and Budget.

Kinder observers on the Hill say Kreps' highly touted organizational abilities may pull the department's programs into sharper focus, but they, too, see little chance for Commerce to enjoy a key economic advisory role in any administration.

The very nature, as well as the size, of the department requires the Secretary and her staff to divide their attentions among scores of issues from international law of the sea to the Arab boycott to trade assistance.

More than 35,000 persons in 13 bureaus work for Commerce. They advise businessmen on how and where to market their products overseas, take the census, forecast the weather, protect consumers by testing products and setting minimum standards, oversee U.S. shipping and administer a $6 billion local public works program to aid depressed communities.

Kreps, an economist herself and former vice president of Duke University, repeatedly has told gatherings of business groups and the press that she intends to strengthen Commerce's role in making national economic policy. In a recent interview, however, she placed a qualifying perspective on that goal.

"We have a vaster mandate than does Treasury, which requires a great deal more time to deal with a greater number of issues," she said. "The narrower scope of Treasury. I'm sure, enables the Treasury Secretary (W. Michael Blumenthal) to concentrate on strictly financial matters. Treasury chairs the Economic Policy Group. They have to be in the forefront in tax and fiscal matters, while OMB is involved in anything affecting the budget.

"Of course, nobody has the central role that CEA (Council of Economic Advisers) has. Charlie (chairman Charles Schultze) sees the President almost daily about economic policy."

While Commerce has little impact in fiscal and budgetary matters, she said "in strictly economic matters, in the policy group, I've had as much impact as any Cabinet officer. The President is a very accessible president. He is eager to hear what any Cabinet officer thinks about any issue."

The constraints on her time are many, she admitted, but she added firmly, "It ought to be possible even for the Secretary of Commerce to delegate issues in such a way as to free some time - to devote a portion of her time to concentrating on economic policy, because that, after all, is the overriding concern of the department."

Jerry Jasinowski, assistant secretary for policy and one of her key aides, pinpointed the problem.

"We have programs to run; Treasury doesn't," he said. "Commerce has traditionally been the weak sister in economic policy-making and still is. It would be very difficult in the near term to equal Treasury - in fact, impossible. We're not setting out to do that. But what we are setting out to do is to make Commerce a stronger and much more viable actor in economic policy."

The five areas cited by the Secretary as priorities in her administration are the Economic Development Administration, which channels aid to depressed communities, both urban and rural; economic policy and a more effective utilization of Commerce's vast statistical resources in the Census Bureau and the Bureau of Economic Analysis; oceans policy, the accompanying environmental and commercial issues, coastal zone management and fishing rights; improvement of the domestic business climate; and the application of science and technology to current marketplace problems.

Her priorities are complex and diverse, providing ample ammunition to critics, such as one OMB staffer who said, "She bitten off more than she can chew - especially for that department."

But the positive attitude of the Commerce staff is that they will accomplish much, if not everything.

The new staff at Commerce has been surprising a lot of people lately. Some observers say that's because they're an impressive lot, many of them handpicked by the Secretary.

As one administration source said recently, the major staff appointments reflect the Kreps persona.

Sources within and outside the administration are free with their complimentary assessments of her intelligence, professionalism and gracious manner. And few downplay her determination.

"I've never known anyone to walk away mad after an argument with Juanita," said a foundation official who worked with her in her pre-Commerce days. "But she's tough - she makes her point of view known."

A soft-spoken Southerner raised in a Kentucky coal mining community, Kreps answers questions the same way she volunteers her own views: directly, concisely, but with a gentility rarely evidenced in the worlds of finance or politics.

In her work as an economics professor and author as well as in her role as a director of five corporations and the New York Stock Exchange, her concern for people guided her decisions. She raised women's issues, racial and ethnic minority issues, environmental issues, questions of the impact of policies on human beings.

As she told a reporter last year, "It's our responsibility to make a fuss."

The individuals on her staff appear to think that that's their responsibility, too.

The Number Two spot in Commerce went to millionaire industrialist Sidney Harman. Harman gave up the operation of Harman International Industries, Inc., a Fortune 500 company involved in the manufacture of audio electronics systems among other items, to become Under Secretary of Commerce.

Harman has an impressive reputation as a proponent of work humanization programs, as well as that of an outspoken civil rights advocate.

In his 12 plants, Harman pioneered flexible scheduling for employees, enrichment courses ranging from philosophy to business management, an employee stock ownership plan and autonomous newspapers free to criticize management.

While Kreps focuses on policy issues, Harman's job is to supervise the daily operation of the department.

And he is the dynamic force behind the reorganization of Commerce.

But as he explains how the eight-person administrative team is probing each division for weak spots and duplication of programs and energies, he talks of "setting up circumstances so people will be much more productive, so people will feel worthy and that their efforts are counted as important."

He identifies "the weave, the common thread" running through the disparate entities of the department as "spiritual in character," a contrast to Kreps' assessment that each of the divisions either measures, regulates or is otherwise necessary to the operation or marketing of American business.

He provides the poetry, she the prose.

Both are magnetic personalities. While Harman is charismatic, almost evangelical, in manner, Kreps draws people to her with her quiet warmth, unexpected wit and sheer graciousness.

When asked why he gave up a multimillion-dollar business to work in the government, Harman said, "Life is most gorgeous when you combine the head and the heart, when there's an equilibrium between the professional, technical skill and the spirit. I see life as a lively transition and this was a chance to grow, to do something different. There's a sense of history to be made here and I wanted to be part of that."

And then, of course, there was Juanita.

"If she were not here, I don't know that I would be," he said. Being second in command to Juanita Kreps "is not difficult at all. It's joyous," he said. "We are mutually supportive, respectful, affectionate. It's kind of nice to have a partner to work with, someone you can share the experience with."

Harman said Commerce is no longer the "dead" Cabinet department. "Beginning with the Secretary, there is gathered here a group of people who respect each other, who combine an interesting matrix of competence and compassion. When that happens, marvelous changes can occur. Commerce attracts great people because it's alive."

Then there's Jasinowski, a youthful economist who won respect as the senior staff member for the Joint Economic Committee and later for his work on the economic task force of the Carter transition.

Jasinowski said he turned down similar staff job offers at the White House, Treasury and Labor "because I liked Juanita so much."

He said she persuaded him to come to Commerce by telling him that it would be "like being a woman in a man's world. They don't expect much, so when you do something significant, they're really quite dazzled."

Her plans to "do something significant" enticed him to the job.

Harman recruited his trusted investment banker and lawyer, Frank Weil, away from Kidder Peabody & Co., Inc., where he was a partner, to take over the languishing Domestic and International Business Administration.

DIBA is, in effect, the nation's traveling salesman. It's staff identifies export markets for U.S. businesses, sets up trade missions, staffs overseas trade offices and advises local companies through field offices around the country.

Weil made headlines recently by speaking out about the dangers of the growing U.S. trade deficit, which many in Commerce feel has been downplayed by the Treasury Department.

His point was well taken, Treasury Secretary Blumenthal conceded days later. It turns out that Treasury is worried about how large the deficit could become if left unchecked.

That concession was accepted gleefully at Commerce. "You might say it's one for our side, it's only the first inning and we're still at bat," one high-level aide said.

A score of other executives appointed to high-level posts at Commerce have begun revamping their departments, streamlining programs and injecting an air of excitement into the bureaucracy.

Maybe it won't last, one 16-year veteran of the department said last week, "but it's a hell of a difference now."