Not until he encountered the Department of Health, Education and Welfare did Ivan Hill realize just how dark, muddy and roiled are the waters of reform in which he swims.

This was his idea: He wanted HEW to hang copies of the government code of ethics, adopted by Congress in 1958, in a few selected offices, with the aim of promoting efficiency and cutting waste.

It wasn't the most bizarre idea ever dreamed up, but what Hill got in response was a rather remarkable catalogue of the reasons HEW could not follow his suggestion.

Thomas S. McFee, an assistant secretary, wrote to convey the thanks of Secretary Joseph A. Califano Jr. But he said the code already was printed in HEW's Standards of Conduct, in Title 45, Code of Federal Regulations, Part 73.

McFee did not say if all HEW employes are required to keep Title 45, CFR, Part 73 on nightstands for bedtime reading.

(No matter. Just last month, however, the General Accounting Office reported to Congress that HEW's standards are inadequate-incomplete, complex and out of date.)

HEW Inspector General Thomas D. Morris wrote to assure Hill that worker efficiency and ethics remain "a high priority" in his office.

That exchange occurred several weeks ago, but Ivan Hill's eyes still are spinning in dismay. HEW people say the code does in fact hang in a few offices, but no, no one has given an order that it be posted anyplace.

"It's really simple-that code is the law of the land passed by Congress," Hill said. "If Joe Califano doesn't have the guts to hang up a code of ethics, we are in pretty bad shape."

Actually, Hill doesn't blame Califano for anything, but he thinks the vignette from HEW is instructive.

"We figure the most urgent need in the United States is to make the country honest enough to stay free . . . . Unless it becomes 'all right' to be honest, we will move more and more into a centralized, authoritarian society."

Hill, it might be said, is a man stricken with terminal optimism, however. He actually believes there is a good chance to make ethical conduct a basis of everyday life in the U.S. of A.

He is the unsalaried president of American Viewpoint, a frankly capitalistic organization founded in the 1920s to promote good citizenship-an across-the-board application of the Golden Rule. Ethics, in a word.

Obviously, the cause has come upon hard times: corporate scams, government ripoffs, political sellouts, religious frauds. Bribes, lies, cheating. You name it.

But terminal optimists don't give in. Hill can go on for hours about the need to imbue society-government, business, what have you-with more ethical behavior.More, he thinks it can be done.

"We believe this country is ready. There is a powerful ferment going on, a demand, a recognition of the need." Hill said. "Without question our system is the best, but capitalism cannot function without a high degree of honesty and trust. The only way it is going to succeed is to ethicalize it.

He continued: 'Even the companies see it coming and many of them want to joint the bandwagon. Some companies now have ethics committees-you'd be surprised how many of these damned businesses realize the roof if falling in on them."

Hill sees other changes occurring. In Congress, for example, a House Education and Labor subcommittee last week held hearings on a bill that would earmark money for public school instruction in ethics and citizenship.

The bill was introduced by Rep. Charles E. Bennett (D-Fla.), chairman of the ethics committee and author of the 1958 code of ethics that was approved by Congress.

American Viewpoint, which gets much of its funding from corporate interests, is already ahead of the game. Hill is expanding the organization's Ethics Resource Center here and its library of ethical materials.

Hill is a retired advertising man and business executive who took over as president of American Viewpoint six years ago when the organization was in deep debt and not very active.

He moved the operation to North Carolina from New York, then brought it to Washington a couple years ago. The organization sponsors seminars for schools and business, helps local governments draw up model ethics codes, provides research documents.

Hill thinks that somewhere out there, plenty of Americans are becoming concerned about the same things he is concerned about.

In 1973, American Viewpoint ran a full-page and in The Wall Street Journal, calling for help from business leaders "with the courage and faith to support a movement to make America more honest."

'We didn't get a single answer from any school or from any major business in the United States," Hill said. "But we got several thousand letters from 'little' guys. To me that was inconceivable."

The terminal optimist kept plugging. Another full-page ad in seven major newspapers in 1977 brought a larger and more promising response.

American Viewpoint is nonpolitical, nonsectarian and, even though its board of directors is dominated by corporate leaders who tend to be conservative, doesn't take sides on political issues.

"You know," Hill continued, "we were trying to find executives for our board from companies that were not in trouble on ethical matters and we had a helluva time. So our board is not as balanced as we like. But until big business gets itself in order, the public won't give a damn about anything we say. The public won't follow until ethics is overt in the conduct of a company's business."

The businessman who decided to do something worthwhile in his retirement years had another thought.

"People in this country are not unhappy with the profit system. They just want to share more and they want the system implemented better. Business has to understand that," Hill said.

That's the American Viewpoint, from Ivan Hill. He still would like to see the walls of HEW-and every other American institution-papered with Rep. Bennett's code of ethics. That would be a good start.