AS AN EXAMPLE of political surgery, President Carter's replacement of Dr. Arthur F. Burns as chairman of the Federal Reserve Board appears to be a success. The nomination of G. William Miller, the head of Textron Inc., suggests no great or sudden change in policy, which ought to reassure businessmen. But neither is it a commitment to maintain precisely the Burns position. By choosing the head of a large industrial company, Mr. Carter offers an interesting hint as to precisely which part of Dr. Burns's constituency he considers most important. It isn't the banks and the stock markets. It's the corporations, who actually control real investment - the people who decide whether, and where, to build the new plants.
As Dr. Burns prepares to leave office, he can justly reflect that he has earned the great gratitude of his country. He has served the Fed and the United States extraordinarily well. He brought to that office personal rectitude, candor and intellectual grasp - qualities of enormous value during the long collapse of the corrupt Nixon presidency and the confusion of the transition to the Ford administration.in those years he became a symbol of stability.
Then why not reappoint him as chairman of the Fed? Because he had been in the job for eight years and - as Mr. Carter put it in his television interview Wednesday evening - eight years is enough. There is an extensive history in Washington of men who have stayed in their jobs too long at great cost, eventually, to their own reputations and the institutions they ran. The theory of the indispensable man is dangerous, not least in an agency like the Fed, which does most of its work behind closed doors.
People who have been in high office for many years acquire battle scars that can hinder them as circumstances change. For example, the Fed presided over unusually rapid growth of the money supply in 1972. It was consistent with the Nixon administration's vigorous - and, as it later turned out, highly inflationary - strategy to crank up the economy for the 1972 election. The claim that the Fed was purposefully collaborating with the White House in that strategy remains unproven. It's not even possible to say with certainty that the Fed's policy in 1972 was wrong, given the information available to it at the time. Certainly Dr. Burns has always heatedly denied that he was helping the Nixon campaign.
The point here is that he remains sensitive to this accusation; ever since then he has leaned over backward to avoid the slightest appearance of using the Fed's immense influence for anything that might be perceived, by the stretch of anybody's imagination, as a political purpose. Perhaps some of the recent friction between him and the Carter administration can be attributed to this posture. But not all Presidents are Mr. Nixon, and some of them are even occasionally right. That's why it is useful, from time to time, to change the command at powerful agencies like the Fed.
Mr. Miller, nominated to succeed Dr. Burns, has had more international experience than most American businessmen. Another interesting aspect of his record is the attention that, as corporate executive and as chairman of the National Alliance of Businessmen, he gave to the specific creation of jobs. That's a promising background. This country is now running very large trade deficits, and the Fed oversees the financing of that debt. If interest rates here go too low, foreign lenders will take their money elsewhere and the dollar's value will drop. If interest rates are pushed too high, they will cripple the business expansion here at home and increase unemployment. Dr. Burns has not been doctrinaire, but he has tended to give the higher priority to stabilizing the exchange rates of the dollar. This question needs to be reconsidered. The only major economy in the world still expanding satisfactorily is this country's, and the rest of the world has the strongest possible interest in the steady growth of its markets. Mr. Miller can't talk much in public about the delicate balance of interests here, but in private he needs to think about it carefully.