Fourteen years ago, the U.S. Army was an institutional casualty of the Vietnam war. It was racked by racial conflict and plagued by narcotics abuse. Its draftees went into battle bravely, but wearing peace symbols. Its noncommissioned officer corps was decimated. Its commissioned officer corps was stained by the My Lai massacre carried out under Lt. William L. Calley Jr. Soldiers returning from Vietnam were called "baby killers," harassed and made to feel ashamed of their uniforms.

Today that has all changed. The U.S. Army's anguish has disappeared; its spirit of pride has been restored.

The Army's chief of staff, Gen. John A. Wickham Jr., who was so gravely wounded in Vietnam that a chaplain administered last rites, recently declared that the Army of 1985 is the best in his 35 years as a soldier. His optimism is shared by the chiefs of the Navy, Air Force and Marine Corps on the 10th anniversary of the collapse of South Vietnam.

The American people also seem satisfied with their current all-volunteer armed forces. Only 25 percent favor a return to the draft at this time, according to a Washington Post-ABC News Poll conducted last month, while 73 percent are opposed.

The transformation of the Army and its morale has been remarkable since early 1971, when The Washington Post reported on its sorry condition at posts around the world. The Post articles on an "Army in Anguish" described disquiet and uncertainty everywhere in the Army.

In those days, getting high on drugs was a way of life in some units, not only off-post but also in the barracks and on the battlefield. Drug lords in khaki used gangland terror tactics on fellow soldiers.

"Fraggings" -- assassinations of officers by enlisted men -- were evidence of a poisoned relationship between the leaders and the led. Other crimes, including murder and desertion, were alarmingly frequent.

Blacks and whites were at each other's throats, particularly in U.S. Army units in Germany, which were drained like a swamp as the Army's best men and weapons were pumped into Vietnam. U.S. commanders in Germany said they worried more about race riots than attacks by the Soviets. They kept most of their ammunition locked up to make it more difficult for GIs to kill each other.

Today, by contrast, there are only a few clouds on the Army's blue horizon. One is evidence from public opinion surveys showing that fewer young people are inclined to join the military, a problem that becomes more serious as the proportion of young people in the population declines steadily and more jobs open in the civilian labor market. Another is the search for ways to economize during President Reagan's expensive military weapons buildup, raising the question of whether the Army can pay for and make good use of everything it has ordered.

But, in general, 10 years after Vietnam, there is much good news for the Army:

* The noncommissioned-officer corps has been rebuilt.

* Standards for officers are higher.

* No soldier is in uniform against his will, because the draft ended in 1973.

* Abuse of drugs and incidents of crime and desertion are way down.

* Black and white soldiers seem to be getting along much better.

But, skeptics ask, will this all-volunteer Army fight, or does it comprise nine-to-fivers who joined only because they could not find a better civilian job? Only subjective judgments are possible. But recent visits to several Army outposts where morale was low in 1971 produced evidence of a new mood of optimism. Soldiers in Training

In Fort Dix, N.J., where the Army tries to turn teen-aged volunteers into soldiers in eight weeks of basic training, tomorrow's soldiers climb down from hot buses throughout the night. Clad in jeans, bright shirts and running shoes, the young men and women half-stumble through the dark into the glistening reception center here, their gateway to a new life as soldiers. As new arrivals file past desks to get paper forms and dog-tag chains, the men and women who arrived a day or so earlier are gathered with shorn heads in the reception-center auditorium to hear from an officer, a sergeant and a chaplain.

In interviews, two young men offered views that spanned the spectrum of opinion of the unformed soldiers being enlisted by the Army these days.

"I'd like to get the money for college, get my degree and go back in the Army as an officer," said Loren Kent, 17, an honor student from West Branch, Mich., who received a $3,500 bonus to enlist for four years to learn automobile engine mechanics. "I figured, to make something of myself I had to be a man first, so the best way would be to go in the service. I always wanted nice cars. I didn't want to end up being a caretaker like my father." Kent said he would go into combat willingly and plans to attend paratrooper school during his Army career.

Frank Carman, 19, of Bridgeton, N.J., said, "I'm mainly here to have a job and have something to do rather than sitting around the house with nothing to do." Carman went on active duty from his home-area National Guard unit in hopes of learning truck-driving skills that would land him a civilian job. Asked whether he would go into combat if war comes while he is serving as an Army truck driver, he replied, "No. I don't like fighting or nothing like that."

Lt. Col. Mel Smith, who runs the reception center, was visibly agitated when he heard this remark and later asked a reporter to remember that these are untrained recruits. "It's up to us to make them soldiers," Smith said. "They'll fight. Just take a look at what our women are doing here."

On a tough obstacle course that the trainers at Dix call a "confidence-building course," young women charged over wooden walls, helping each other up and over with obvious relish. They swung from ropes, climbed simulated buildings and then, draped in ponchos in the drizzly weather, marched away singing lustily: "We are soldiers in the Army. We have to fight, although we have to cry. We have to hold up the blood-stained banner. We have to hold it up until we die."

Today's Army recruits must run and think harder than their predecessors, the Fort Dix commander, Maj. Gen. Thomas W. Kelly said. He said the toughest aspect about being a soldier in this new, high-paid volunteer Army is: "You are required to do your job. If you don't want to do your job, we say goodbye." "It's a Better Army"

Across the Atlantic, in Heidelberg, West Germany, Gen. Glen K. Otis, commander of the U.S. Army in Europe, contrasted his troops today with those in the dark days during the late 1960s and early 1970s, when he was a brigade commander in West Germany.

"The concern in the entire brigade back then was our plan to prevent tonight's riot . . . . We had to download ammunition because of fear of theft," Otis said. "Today it's a better Army than I've been in since 1946."

Otis said the Army improved "through a combination of things. We went back to a stable, systematic approach to how we train and how we produce noncommissioned officers" in contrast to the hurried "shake-and-bake" training for Vietnam when no experienced reservists were available.

"We recognized the importance of quality of life to the individual and his family, so we put a lot of effort into that," Otis added. "After 30 years of no money, we put some in to the soldiers' work places so that, when the troopers go to work in the morning at the motor pool, where all your combat vehicles are, they're not going to work in a mudhole . . . .

"I think the public in Germany as well as in the United States viewed the Army with alarm in periods when we had high indiscipline . . . . I do believe the public has good respect for the Army now . . . . The way that is achieved is strictly on the basis of achieving professionalism, doing the job the public expects us to do."

Crime, drug abuse and racial conflict have decreased since Vietnam, Otis said, because "we do not have antipathy to an unwanted war. Racial riots that were extant in the states at the time and internal to the services are not there now. Leadership has been restored at the noncommissioned level . . . .

"There are still racial prejudices, no question about it," he said. "On the other hand, they have to be covert, because any overt one is immediately punished, changed, altered or fixed because of our stringent policies on it . . . . I believe that every decade we'll see a bettering of the way races get along, just because we've committed ourselves to that. But it isn't going to be done overnight . . . ."

Asked if he were describing a golden age for the Army, Otis thought before replying. "Once you put a name to it like that, it's like naming the Strategic Defense Initiative 'Star Wars,' " he said. "It worries me. But the answer is yes. We have really No. 1 soldiers. We're getting adequate funds. The new equipment is coming -- not as fast as we'd like, but it's coming. And we're reorganizing the units, and the training is dynamic. Those are pretty good parameters." Crime, Drug Use Down

In Nuremberg, West Germany, the U.S. Army's Merrell Barracks, ordered built by Adolf Hitler for his SS troops, look the same outside as it did in 1971: shell-pocked from World War II, gloomy, depressing. But privates, sergeants and generals say everything else is different in Army life in and around the barracks.

In 1971, Col. Matthew R. Wallis, a West Pointer, had described his frustration in failing to stop frequent fighting between black and white soldiers when he was commander of the 4,000-man 2nd Armored Calvary Regiment, headquartered at Nuremberg. Maj. John T. Sherwood, in 1971 staff judge advocate of the Nuremberg Trial Center, had said then that "one of our big problems is how to protect the soldier in his own barracks. It's a tremendous problem . . . . I'd just hate to live in the barracks. I wouldn't like that at all. Crimes of violence, such as robbery, are at an all-time high and climbing . . . . The guy who just wants to be let alone isn't being let alone . . . ."

Today, Col. William Crouch has the job that frustrated Wallis. By contrast, he was ebullient as he toured the compound. I've got a lot of super officers, some tremendous COs, good troops," Crouch said. "I see the quality I was first exposed to when I came in the Army. I see senior, experienced, noncommissioned officers caring for troopers and helping train the young lieutenant by saying, 'Hey, lieutenant, do you think it would be a good idea . . . ? ' -- You know how it works. Back in 1973, you were just trying to stay alive" as an Army commander by keeping up with the problems, including discipline, drugs, crime and broken equipment.

"The new equipment we're getting [including the M1 tank] is starting to equal the people," Crouch said.

Lt. Col. David R. Dowell today has the overview of crime that Sherwood had in 1971. Dowell is Army defense counsel for the sizable concentration of soldiers around Nuremberg.

"When I was stationed over here from 1972 to 1976, the major areas we were dealing with were racial tensions and drugs . . . hard drugs: heroin, Quaaludes and amphetamines. That was 60 to 70 percent of our business at that time," Dowell said. "I've now been over here 22 months on this tour, and there has been one heroin case . . . no Quaaludes, no amphetamines, one possible LSD . . . . That's one of the major differences we've seen in the last 10 years: the virtual elimination of the hard drugs.

"We're getting a different quality of soldier," he said. "When I was over here before and I would walk from my office to the command section, about 100 meters, it was inevitable I would have to make on-the-spot corrections for uniform violations, failure to salute, most any type of military infractions.

"This time, the soldiers were well-groomed, well-dressed, took pride in themselves. There was never a problem with salutes or military courtesy. The soldiers we have today are staying away from the hard drugs. Drugs are still a problem, but most of what we're seeing is hashish. It's much easier to deal with from a legal perspective."

The number of soldiers in the Mannheim stockade is about half that of the 1970s, and their offenses are less serious, Dowell said. "What we're seeing now is what you would call felonies in the States. A fair number of drug cases of the hashish variety . . . . The felonies are aggravated assaults. Some rape, but those are on the decrease."

Col. Roger L. Bernardi, who commands the 14th Field Artillery at Pinder Barracks, former home of Nazi gunners who fired at Allied planes attacking Nuremberg, recalled: "When I came over here to the 6th Batallion here in 1978, there had just been a murder here. The object of the exercise was to hold one chap down and fill him up with a syringe full of liquid strychnine and heroin to addict him, and the young fellow died. He was a private."

The Army of 1978 was easy for nonachievers to join, Bernardi said, because "a decision was consciously made that we were going to be an institution for social betterment," which made getting rid of troublemakers difficult. Asked how difficult it is to do so today, Bernardi snapped his fingers and said, "About this fast."

"Back five, seven or eight years ago," he said, "the whole system was designed to make the volunteer Army work and make the Army an institution for social betterment and to protect to the Nth degree the perceived constitutional rights of everyone. Today, we've got a professional Army. We have built and continue to build a strong noncommissioned-officer corps, which is improving the officer corps dramatically. And Congress has said over that length of time, 'We do have a good Army out there now. So let's be concerned with maintaining the quality of it.' " GI Life Improving

Outside Merrell Barracks in downtown Nuremberg, GIs gather at American-style hamburger shops, German cafes and rock 'n' roll night clubs where they are away from their officers. Most of them interviewed in these off-duty haunts said that drug abuse was not tolerated, that black and white soldiers got along with each other. Most aspects of their Army lives were improving, they said, although not always as quickly as they would like. Several said their training in the States did not match their jobs in Germany.

"Wish now I'd gone in the Air Force," a black sergeant said. "They live better. Army's catching up, though. It's got good training."

Asked about relations between blacks and whites, he said, "We get along." Of the German attitude toward black American soldiers, he said, "Sometimes, older people look at you and say, 'What are you doing here?' But that's anywhere."

Terence Cowan, 23, of Battle Creek, Mich., a young black medic, said he thinks that "the Army is becoming more competitive," and that training that "used to be like going to kindergarten" is getting tougher. "I don't think there's any tension" between blacks and whites, he added. "There's prejudice, but not so much you feel it."

In a Nuremberg cafe called The Komm, American soldiers can be found in off-duty uniforms of leather jackets and chains. One wore the twisted hair and loose clothes of the punk rocker. He said he was a specialist 4th class trained to repair computers on some of the Army's most advanced weaponry but did not get to practice his skills. He sought escape when off duty by transforming himself into a punker. As he talked, his German girlfriend kept kissing him and rolling coins off her nose so they bounced off the table and into her beer.

On his birthday, the soldier-technocrat-punker recalled, he dyed his hair yellow, spiked it, put on leather clothes and went to downtown Nuremberg to celebrate. When he got back on base, he said his sergeant did not take him behind the barracks for the old-fashioned military discipline but counseled him that his get-up was "unacceptable because we're supposed to be perfect examples of all-Americans."