The state of White House befuddlement over Bloody Monday was exposed the next day when Treasury Secretary James A. Baker III started President Reagan lurching toward consultations with Congress and a potential tax increase in the future.
This intervention, intended to stave off catastrophe on Wall Street, won the secretary no cheers inside the White House. It raised further fears that the president, despite Baker's reassurances to the contrary, would betray the tax reduction policy that is the last vestige of his revolution. It also generated furious efforts in the conservative movement, inside and outside Congress, to commit Reagan against Democratic trade and tax bills.
In truth, administration policy in dealing with the stock slide is a shambles. Opinions of what to do next about economic policy range from hard-line confrontation with Congress to middle-road compromise to virtual capitulation. Staff management of Reagan himself has crumbled, with the president lurching hither and yon with impromptu statements. If lack of leadership in the Oval Office predicated the market plunge, what has happened since is no cause for confidence.
Not even the 500-point Dow Jones crash on Monday changed the complacency in the West Wing. ''One day does not a market make,'' Chief of Staff Howard Baker told his surprised subalterns at the regular Tuesday morning meeting. If they expected heroic action, they were getting silent stoicism.
Advice was plentiful. Rep. Newt Gingrich proposed that Reagan call on Congress to abandon its market-disrupting trade and tax bills -- an idea backed by Rep. Jack Kemp -- and then ask for new spending recision authority. Howard Baker & Co. wanted no such clash with Congress. But neither did they respond to calls by Sen. Robert Dole and other orthodox Republicans for a ''summit'' with Congress.
It was then that Jim Baker returned from a European trip shortened by the market crash. The golden chief of staff of Reagan's first term who could do no wrong has been turning into the second term's scapegoated Treasury chief. By Tuesday, he was reviled in country club locker rooms as the architect of lost wealth.
While it is absurd to blame him for the crash, even friends admit he was playing with fire by again seeming to talk down the dollar -- a threat to American economic stability -- in a well-intentioned effort to stimulate the German economy.
Jim Baker's critics inside the administration felt he was trying to remove his goat's horns when he swept into the White House Tuesday for a meeting with the president, Howard Baker and Federal Reserve Chairman Alan Greenspan. Howard Baker agreed to a more forthcoming presidential position on talks with Congress.
From the White House came grumbles that the secretary had forgotten he no longer was chief of staff. From the Treasury came explanations that somebody had to reassure markets and that there was no retreat on taxes. The problem was that the trumpet was no more certain than it had been before. Since the economic ''summit'' with Congress always has been a euphemism for bipartisan agreement to raise taxes, the president was asked this after his Tuesday afternoon statement. ''No, if you heard that,'' said Reagan, as he left the White House, ''it must have been the helicopter.''
Wednesday provided no further definition. The president's fervently held anti-tax views were mixed with reassurances he would consider what came from Congress. Other proposals were fed into the West Wing. One idea: Let Congress have a small excise-tax increase if it would go along with a market-pleasing drop of the capital gains rate to 15 percent. But Congress never will buy that.
Nevertheless, imaginative proposals will be necessary if the president is to avoid the Herbert Hoover label that Speaker Jim Wright, The New York Times and other tax boosters would pin on him. President Reagan's vague reassurances do resemble President Hoover's press conference comments one week after the 1929 crash: ''. . . for the first time in history, the crisis has been isolated to the stock market itself. It has not extended into either the production activities of the country or the financial fabric of the country. . . .''
But as the speaker and his friends do not point out, platitudes were soon followed by taxes. Hoover, backed by huge bipartisan majorities, raised taxes with a frequency and vigor that steadily deepened the Depression. However well-intentioned may be Jim Baker's efforts to calm markets, the horrible example of the course taken by a befuddled White House nearly 60 years ago must not be forgotten.