FOR A NUMBER of years as a private school teacher, I was part of a team turning out "the best and brightest," the kids who grow up to lead this country. I knew that something was terribly wrong. I knew we were dampening, even crushing, the natural spirit of many good yound people. Yet we were also failing the most talented children, giving them false signals of superiority instead of challenging their minds.

I remember a tough, wiry kid named Phil who worked twice as hard as anyone else, but was deeply discouraged by his D in calculus. I tried to tell him that competitive grades in school don't mark one for failure. I was right: Phil turned into a successful consulting engineer.

I also taught Robert, a 14-year-old genius who was pampered by schools in awe of his natural abilities. Robert graduated from MIT at 18 with an A average, knowing little about himself. Eight years ago, he suffered a nervous breakdown and hasn't worked since.

Phil and Robert are two examples of the contradiction that is at the heart of American education. It is a system that erects complicated tests and measurements to grade our young people - yet we know that there is no correlation between a happy, fulfilling life and the grades given a child in high school or college.

As one teacher who is worried for his country, I say our present system is un-American. It fails to foster the democratic spirit. It is unfair. It favors those who have the right kind of test scores and batters the rest. It is not working, not producing the kind of educated young people America needs.

Now, as an educator, I am following a different approach, one which follows basic American tenets for genuine education. At the Hyde School in Bath, Maine, which I founded in 1966, we try to base everything on this principle - the equality of children in school.

At Hyde, we assume that each kid does have a unique potential, and we designed our school on that premise. The curriculum I chose was the development of character - courage, integrity, concern for others, curiosity, leadership. Schools have always claimed to teach this, but we believe it has made a revolution in the traditional, narrow roles we usually give to student, teacher and parent.

The present system drives parents to become ridiculously intense about these artificial measurements, about where their child ranks and where he goes to college and so forth. But how many parents care - genuinely and constantly - about the real content of what their children are learning? Ask any teacher.

I am not talking about a "back to basics" curriculum fad. I am talking about teaching values for life, a sense of self-worth, of purpose, in addition to skills and knowledge. The present educational system teaches children narrow competitive values and selfish goals, including how to cheat the system and succeed on its terms. Ask any teacher.

This system debases teachers too. They feel so embattled and without direction, they spend a lot of their energy trying to unionize. Why do teachers feel compelled to protect themselves?

The fundamental question which I hope to raise is: How does this system help America? Are the kids more excited, more willing to be part of the great American experiment than children were 30 years ago? I think everyone knows the answer. I would love to start a lively long-distance argument over the reasons why and what we can do about it.

Changing education at a private boarding school is, of course, quite different from changing a public school. We demand a special level of commitment from families and we carefully screen our applicants. But, since we are testing principles of democracy, we try to work with all kinds of kids and we never expel a student. To emphasize the unversal application of what we are doing, I will give examples of young people who were considered unreachable by conventional schools, public and private.

Children know who among them is working at full capacity. And they know who is faking it. At Hyde, we demand that students take responsibility for one another. In the right atmosphere, children will do this, once you have broken through the old "them versus us" ethic which says: "Don't rat on your buddies." Kids make terrific teachers and they discover that teaching is its own way of learning. One basic technique is constant self-examination. The students must write about themselves.Not the usual "what I did last summer" pap, but genuine explanations of their real problems and triumphs.

Here is what Kit wrote:

"We were reading our term papers in English class so others could evaluate them. When Jack read his, I had a sinking feeling . . . I recognized it as a story I once read. Since Mr. Hawley wasn't there, I told the class. Jack said he hadn't copied it, that he had worked very hard writing it and was offended . . . My face was hot and I was shaking and stuttering. I handed him the book and told him it was word for word. He denied copying it again, straight to my face. I threw up my hands and walked out.

"I wasn't hurt that Jack lied to me. In a way, I pitied him, not for what he did - I've done some pretty stupid things myself - but for what he didn't understand . . . It seems like such a burden to cry for other people. I don't like it, I don't want the responsibility . . . It seems like a rotten deal, like having someone confess something to you and leaving you with the burden of all their guilt."

This was written by a student who is thinking deeply about the nature of individual ethics. Kit came to Hyde from a metal institution. She is now an A student in college.

Learning is not simply a matter of the mind. Brad, a boy with high test scores, thought of himself as a "professional vegetable" and avoided sports, but Hyde makes all students participate, no matter how "uncoordinated" they think they are. Brad wrote later:

"The first day out for cross-country I said I couldn't run the three miles because I had weak ankles. But my teammates didn't buy it . . . Everybody started getting on my case and I really resented it. One practice I started walking and Tommy Baez came along and started physically pushing me. I said I had turned my ankle and I was so mad my first reaction was to hit him.

"But then I realized that was useless and started to cry. He really cut into my giving up on myself and my self-pitying attitudes. As he ran off, somewhere through my intense anger, I realized that maybe he was right and I started to run."

How does any school create a new ethic in which successful students take responsibility for other students' failures? Not by preaching to them. Teachers and parents must create programs which cultivate and expect this perspective for the students.

At Hyde, for example, we have our own "Community Action" program in which students help others in the surrounding community - a school for the retarded, a home for the elderly, City Hall, local political campaigns, an elementary school. These are all classrooms of extraordinary richness. They make students take on responsible roles, in which other people depend on them.

Charlie came to Hyde spoiled and pampered, the silver spoon still in his mouth. He got into a lot of trouble at first, breaking the rules and being assigned to "work crew" as punishment. But he was also tutoring an eight-year-old boy in elementary school. The boy came one day to go fishing with Charlie and found him on "work crew." He ran off in tears. Charlie wrote: "I was deeply moved because I didn't realize I had that sort of influence on him."

Today Charlie is a school leader, but it took an eight-year-old to teach him how to get there.

If we believe in democracy, then democratic citizenship ought to be integral to every school's curriculum. I do not mean "mickey mouse" student councils that patrol the halls. Students must learn democracy by helping govern their own school. A senior wrote:

"Every year the headmaster challenges the senior class to radically change the school. It is inspiring, frightening, sometimes threatening, but it does confront apathy and is essential to my education."

One product of this challenge is the "America's Spirit" musicals which the faculty and students write and produce every year. The show has toured 13 states now, including Job Corps centers, and it is a wonderful vehicle for learning on many levels - history, music, theater, character. We insist that each student can find a role - but each student must develop and grow to win a leading role. All sorts of talent is discovered in kids who thought they didn't have any.

Jimmy was a very poor student and rebellious enough to get expelled from a public school. In the "America's Spirit" campus production, he was urged to take Mark Twain and see if he could develop a character from his writing. Jimmy found Twain's skepticism and humor in harmony with his own. "We did the show on parents' weekend, " Jimmy wrote. "That day my father and I sat down and told each other a lot of things we had never said before - about being ourselves and living up to our expectations. It was sort of a sad little talk, but it psyched me up. That night I never felt more like Mark Twain."

Teaching students to be responsible for their own ideas inevitably leads to real conflict. Jimmy later played a Vietnam pimp in another show and it led to an argument at the Pentagon with his uncle, an Air Force colonel. "He called me a traitor and a back-stabber to my family . . . Then he refused to go to the show so I left. I felt badly, knowing he'd surely tell my relatives, but what really got to me was how much he reminded me of myself."

None of these changes for children will succeed if schools do not also change the roles assigned to teachers and to parents.

Teachers need to regain their professional pride and their creativity. If a parent doesn't like my diagnosis of his child's educational problems, he is likely to thumb his nose and reject it. Yet the same person would respond obediently to the youngest doctor fresh out of medical school.

Ironically, we found one of the best ways to reinvigorate teachers is to put them in the position of students - by pushing them into areas where they have no expertise, no credentials. The traditional education system weds the teacher to a subject but I once broke it up by making English teachers teach math and math teachers teach English. The learning improved greatly because the teachers were learning themselves. Does that surprise anyone?

The basketball coach had to take over the dance class and wrote later of this experience: "I couldn't touch my toes, let alone do the other exercises . . . The kids were tolerant, but persistent. I became their project. Humiliation has never been easy for me and I rarely quit on anything, so every night my living room became my dance parlor. I'd analyze the steps and try to stretch my 37-year-old body to bend a lot younger."

This brings us to the last, most difficult, perhaps most important part: the parents. My conclusion, after 13 years at Hyde where we demand participation from parents, is that a student's commitment to his own value is directly related to the commitment he sees from his parents.

If a child is failing, is apathetic or is drifting without any sense of direction we are inclined to ask the parent what values they are conveying to the child. Our commitment is to family education, not just child education, and the parents have their own required "curriculum" to follow.

This includes a "family learning center" at the school that all parents visit for three days. These are not relaxed, "see-your-kid-at-school" times. Parents are asked to write about experiences in their own lives which have caused them pride - or shame - and, if possible, to discuss and share these papers with their children. We tend to judge the quality of a paper by how much it "hurts" in the writing.

This winter and spring, groups of parents in six states and Washington spent hundreds of hours devising their own original "America's Spirit" shows, in which they portrayed their family roots, personal struggles and experiences. The shows were put on before the kids at parents' weekend.

In doing these shows many parents discovered strengths and weaknesses in themselves that had been covered over in the years since they were kids. Again, the process does lead to argument and conflict but it also leads to growth, for children and for parents.

It will take decisive national action to jar our education system out of its "inch by inch" mentality. We need to redefine our American values and insist that our schools express them. I am not talking about easy patriotic gestures, but about the most rigorous self-examination - the kind of self-scrutiny which young people will take seriously. They will see through anything less.

Personally, I would call for a moratorium on all existing standards - test scores, course requirements, teacher training - in order to open to the floodgates of ingenuity. Bring the parents into the school and the school into the family. Make the school take an active role in the community and give the community new teaching responsibilities in the school. Something this radical will create new problems. But I would bet on the creative capabilities of the American people.

Most important is this: Unleash the powerful untapped potentials in our children, all of our children. Every good teacher and parent knows they are there. Every chid should know it too. CAPTION: Picture, Joseph W. Gauld.