THE SECRETARY OF THE TREASURY, G. William Miller, showed a well-justified caution in his response to the Chrysler Corporation's pleas for aid. He doesn't much care for Chrysler's lyrical proposal of a billion dollars' worth of grants. But he is willing to consider loan guarantee, on several conditions.

The most important of the conditions is a demonstration by Chrysler that a taste of federal aid will not prove habit-forming. Chrysler, Mr. Miller says, has to show that the loan guarantees will give it a reasonable chance of returning to health and profitability. Elsewhere in the administration there will be a certain temptation to prop Chrysler up, anyhow and regardless, for the next 18 months - that is, through the election. That is precisely the thing to be resisted.

The Lockheed precedent is a useful comparison. Lockheed's crisis in 1971 was due to two specific reverses. The company had been in a long quarrel with the federal government over the inordinate cost overruns of the C5A, a military transport, and it ended with heavy penalties against the company. Immediately on top of that, Rolls Royce went bankrupt. Rolls was making the engines for Lockheed's big new civil jetliner. The danger to the company was severe but there was reason to think that, if it could get through the immediate squeeze, its normal commercial credit would shortly be restored. That, in fact, is what happened. One-time, short-term loan guarantees were crucial, but they were sufficient.

Chrysler is a very different case. Its position has been slowly eroded in a long, and losing, campaign to compete across a full line of cars against two stronger companies. For Chrysler, it is not a matter of overcoming a couple of recent and specific errors or misfortunes. Instead, Chrysler now is required to turn itself into a somewhat different company, with a different strategy.

The essential argument for helping Chrysler is that it's cruel simply to let plants close and throw thousands of people out of work. But perhaps it's even more cruel to keep those people tied uncertainly to a desperate company, strung along at the edge of survival with government aid. For the employees, that would only mean repeated layoffs and more appeals for wage freezes that, in the present inflation, amount to severe wage cuts.

Perhaps you saw the brief letter from J. Phillip Richley, the mayor of Youngstown, Ohio, on this page Friday. When Youngstown Sheet and Tube Co. closed its huge plant there two years ago, it looked like an irreversible social disaster. It's important not to understate the anxiety and dislocation that the closing caused - but it's also important to recognize that unemployment there is lower today than when the plant was still open, and local prosperity is higher. Youngstown's great asset, it turns out, was not an obsolete steel mill but rather the skill and energy of its working people, who are now being sought by other employers.

The question for Chrysler is probably not whether the company survives, but rather which parts of it survive. That's a painful question, but it's up to Mr. Miller to keep pressing it.