For the first time in decades, the president of the American Enterprise Institute is not named William Baroody. The father-son dynasty that ruled the conservative think tank fell yesterday, when William Baroody Jr. resigned. His replacement as interim president is Paul W. McCracken, a 70-year-old University of Michigan economist who had been chairman of the Council of Economic Advisers in the Nixon era. McCracken is expected to serve for about a year.

Baroody faced internal criticism for his management, which many blamed for multimillion dollar budget deficits, layoffs and sinking morale. At the same time, conservative foundations that had been big donors to AEI decided to withhold contributions in the belief that AEI had become too centrist.

Yesterday morning, Baroody called the staff together as he read his message of abdication -- a day after he had appeared before them proclaiming his intention to stay. According to staff members who were present, his voice cracked and wavered.

"This organization," he said in a prepared statement, "has been the most important thing in my life since I was a young boy, and it will be first and foremost in my heart for the rest of my life."

Then, witnesses said, he paused to regain his composure when he mentioned his father, William Baroody Sr., who made the institute a success. "I have constantly wished that Dad could have lived to see the ideas he nurtured at AEI find such widespread acceptance in this decade and become incorporated in the public policy of this country."

At the conclusion of his speech -- "Get moving, AEI, and get back on top" -- Baroody departed, leaving behind a staff that one AEI fellow described as "stunned and upset."

"It was like Nixon's resignation," said one AEI fellow.

"No," said another, "the feeling is something like the feeling about Jimmy Carter, a good decent man who couldn't make it work."

At 12:30 p.m., the successor was announced by Willard C. Butcher, the new AEI board chairman and chief executive officer of the Chase Manhattan Bank.

Butcher praised Baroody, saying he had done "a very fine job." He said he had "asked him Baroody to be here," but that his request had been rejected. "Management succession," he said, "is a fact of life, even in banks."

McCracken had no prepared statement and noted that "this development occurred only today." He said that he has been "associated with AEI for 25 or 30 years."

In fact, McCracken is one of the founding fathers. Decades ago, Baroody Sr. had recruited Milton Friedman, McCracken and a few other conservative economists as mainstays of the institute. They were a social as well as a political circle, and Baroody's home was an intellectual salon where William Jr. first learned about conservatism. For years, McCracken was the chairman of AEI's Council of Academic Advisers, passing approval on its projects.

In 1971, McCracken quit his post as Nixon's chief economist in protest of the president's New Economic Policy, which included wage and price controls. "We are all Keynesians now," declared Nixon. Well, almost.

McCracken espouses a pre-Reagan era conservatism. He is not a "supply-side" economist and does not talk about "populism." He is an academic, widely respected by his professional colleagues.

Perhaps the greatest imprint McCracken will make on AEI will be as leader of search committee that will select his own successor. The next AEI president, according to Butcher, should be appointed "within nine to 12 months."