For George Hamden Olmsted, at age 77, the idea that people should quit their work at age 65 is nonsense.

"There's no challenge in it," says the crusty, retired Army major general.

Unlike many older people who have no choice, however, Olmsted has a significant role in deciding his own future.

Olmsted is a military man by training, having graduated from West Point in 1922 as class president when Douglas MacArthur was academy superintendent. Olmsted has been in and out of active Amry service - moving from business back to government service in World War II and again during the Korean conflict.

The Des Moines native has been president of the U.S. Chamber of Commerce and national chairman of the Young Republican National Federation. He has helped pioneer the concepts of consumer lending here and abroad and the organization of various banks under one holding company.

Today, he sits on top of one of the most unusual business enterprises in this city or anywhere else in America, Internantional Bank of Washington. Not a bank in the conventional sense in this country. Olmsted's firm describes itself as a diversified financial services company. To Olmsted, it's the closest thing in the U.S. to the traditional merchant banks of Europe.

At his office atop of the Olmsted Building in downtown Washington, Olmsted recently looked out across a balcony, and pointed to the buildings nearby. He cited the Export-Import Bank, International Monetary Fund, World Bank and Inter-American Development Bank, among others. And the White house is visible, too, from the Pennsylvania Avenue NW location.

"Clearly, this is the world's center for finance," he said.

And slowly the world's commercial banking business will recognize this and Washington some day will be what it is not today, a "great international money center," Olmsted forecast.

As a provider of services to this financial center and other communites or industries around the globe. International Bank can look forward to a long future. Olmsted said in a recent interview.

And Josef S. Tressler. IB's president and chief operating officer and the man said to be Olmsted's heir-apparent, added: "Future investment banking developments will have to take place in Washington," and International Bank may well play an increasing role in bringing together the people with money to invest and the people tooking for such capital.

For example, the IB officers revealed, their company has established without fanfare a "Washington finnancial center." A European investor wanted to "get active in the U.S. financial community," and searched the country for a possible avenue before concluding that International Bank was "the only merchant bank," Olmsted said.

The European "wants a piece of the U.S. action" and has established the new operation with IB. Olmsted said IB officials and a European investment group will channel acquisition requests to the new center and seek out potential acquisition candidates. Not only will the IB operation match potential financial partners but it also will supply management if required.

"It could be a very exciting development." Olmsted added, describing one recent approach by an unnamed German group that wants to buy an American equipment company. "They have given the parameters and we are out searching," he said.

This type of business venture is typical for IB, a very complex company engaged in investment in such diverse enterprises as traditional commercial banking overseas, management of Liberia's maritime and administration and insurance in America.

But because of its unusual organization. IB has had problems, too. A serious difficulty has been that of erasing the company's historic ties to commercial banking in this country. At one time, IB controlled Financial General Bankshares, a large bank holding company that Olmsted built. Over the years, the federal government has forced IB first to eliminate the control and then to eradicate all ties to the banking in firm, a process still not completed.

IB is waiting for a final Federal Reserve Board decision on the matter of separating IB and Financial General. Telephone numbers have been changed. IB directors will step down from the banking firm's subsidiaries by year's end and other ties have been severed. The exception is a pension plan started in the late 1940s: IB's total withdrawal would be detrimental to Financial General employees.

The government proceedings have blocked both IB and Financial General from making acquisitions over three years.

In the past year, IB also learned painfully what can happen to an offshore subsidiary. A bank in the Bahamas is being liquidated after assets were found to be inadequate to cover liabilites. Last week, the Washington company filed an unprecedented $9 million lawsuit against the accounting firm of Price Waterhouse, alleging improper oversight at the Bahamas institution.

And during a series of oil spills involving ocean vessels. IB's supervision of Liberia's maritime operations came under federal scrutiny.

But on top of these developments. IB has reported its best six months in history for the first half of 1977. The stock price of IB had the companies in which it has an interest all have been outperforming standard Wall Street averages for the past two years.

In the first nine months this year, for example, the Dow Jones average of 30 industrial stocks declined by 16 per cent and the Standard & Poor's 500-stock index fell 10 per cent. IB common climbed 82 per cent and IB class A rose 62 per cent in the same period, and stock price increases of companies in which IB has aninterest ranged from 18 to 100 per cent.

What attracts investors? Several analysts said the key is IB's diversfication. In brief, the companies affiliated with IB are engaged in foreign commercial and merchant banking; property and casualty insurance; life insurance; finance; venture capital and leasing; and industrial activities - light manufacturing (Avis International) packaging machinery (Kliklok Corp.), engineering and energy equipment (Foster Wheeler Corp.) and sound control and roofing materials (Globe Industries).

A listing of the companies under IB's wings is included in a chart that accompanies this article.

Typically, IB does not own all the stock of the varicits enterprises. It owns 80 per cent of Financial Security Group, Inc., which operates the property and casualty group, 29 per cent of Bankers Security Life; 16 per cent of United Services Life; 81 per cent of Globe; 50 per cent of International General Industries, which includes the other industrial operations, and ownerships ranging from 66 per cent to 100 per cent of the foreign banks.

In terms of IB's own investment, 31 per cent is in the industrial companeis ($40 million), 21 per cent in property and casually insurance ($28 million), 14 per cent in life insurance (18 million), and the balance in other operations.

From these business last year IB took in revenues of $8.3 million compared with $6.6 million the previous year. But the basic source of income is from investment in various IB companies, and total revenues don't begin to explain the scope of IB's business. The company's assets exceed $131 million for example. Life insurance in force of IB companies totals $5.2 billion. Total resources of foreign banks are close to $200 million. Assets of the property-casualty and industrial groups are $154 million and $96 million, respectively.

Profits from IB's operations were distorted in 1976 by the failure of Mercantile Bank and Trust Co., of Freeport, the Bahamas, mentioned earlier. As a result of setting aside money to cover potential losses, IB posted a loss of $511,733 compared with 1975 profits of $863,047 (5 cent a share on common stock).

In the first six months of 1977, however, IB profits totaled $6.2 million (83 cents a share), yp 342 per cent form restated profits of $14 million (20 cents) a year earlier. And revenues of rose 39 per cent to $10.6 million. The biggest gainers recently have been international and insurance business.

Said Olmsted, without hesitation: "The record rests of the last six months are just the beginning of a future that is brighter todat than at any other time in IB's history."

That's a stroing statement for a man natably conservative in his outlook and a man with a feeling for history. Looking back on a firm started here in 1920, one over which Olmsted assumed management in the 1950s, the retired general paints the future scenario 82 per cent of assets invested in industries that will outperform as other business leaders, plans to climinate unprofitable high risk venture capital operations, expanded packaging needs worldwide.

In short, he believes there is a place in America for merchant banking, started in 18th Century England and dealing in the solution of financial puzzles rather than building deposits.

Olmsted has a large financial stake in his dream as owner of 1.5 million common shares and 201.000 class A shares, or 32.55 per cent of voting shares in the company as of last June 1.