President Carter yesterday fired W. Michael Blumenthal as secretary of the Treasury and named G. William Miller, the former Textron Inc. executive who is now chairman of the independent Federal Reserve Board, to replace him.
The action climazed 2 1/2 years of infighting between Blumenthal and Georgians on the White House staff, stemming from mid-1977, when the secretary refused to intervene in a comptroller of the currency probe of budget director Bert Lance.
Only seven weeks ago, Carter had installed Blumenthal as head of a newly revamped economic policymaking steering committee, with his own office in the White House and near-unprecedented authority over economic policy issues.
Miller's policy views are almost identical to Blumenthal's. Conservative former business executives, they favor austere budget and credit policies and more investment incentives. Both support oil-price decontrol.
Carter broke the news to Blumenthal personally in a 30-minute meeting in the Oval office only a few hours after the president had asked Miller to take the job.Miller was in San Francisco yesterday to deliver a speech.
Sources said Blumenthal had become fed up with the White House relationships and had told key aides Wednesday night that he would resign no matter what Carter decided. Yesterday he told an audience, "My resignation was not pro forma."
Blumenthal played the good soldier at a farewell news conference after the decision was announced, saying Carter was making the changes in his Cabinet at "the right time." He called the Miller appointment superb.
The secretary received two standing ovations from Treasury staffers who had gathered to hear his announcement. Blumenthal appeared to have a lump in his throat as he addressed the group. He was accompanied by his daughter, Ann Vollman.
Initial reaction in the financial community was generally negative. For all his ups and downs, Blumenthal had been regarded as a mainstay in Carter's anti-inflation efforts and architect of the successful Nov. 1 dollar-rescue plan.
Alan Greenspan, former president Ford's chief economic adviser, called the shift "most unfortunate," complaining that it would leave "a gap at the Fed" and "undercuts any sense of firm policy direction from the president."
In San Francisco, Miller told a news conference that the change was made because "we need more forceful action to solve every problem. The president's purpose is to recognize the need to get the team into more balance."
The Fed chairman also took a cue from Carter's Sunday night television speech, saying that Americans now have to link arms and work together. He called on citizens to "say something positive to someone every day."
The Fed announced yesterday that Frederick Schultz, the Florida banker who was confirmed as vice chairman of the Fed Wednesday night, will serve as acting chairman until a new chairman is installed.
Blumenthal had been regarded by some White House staffers as disloyal, and several times was undercut by top Carter aides. At his news conference yesterday, he denied that charge.