President Reagan's initial attempt to move public wealth into private hands had little success as policy, but it was a lexicographic triumph. It got the word "privatize" into popular American dictionaries.

Because of an increase in its use, the verb "privatize," with its derivative noun "privatization," made a debut in 1983 in Webster's Ninth New Collegiate Dictionary. They are to appear in the next edition of the Random House College Dictionary and are under consideration by American Heritage.

Webster's defines privatize: "to make private, esp. to change (as a business or industry) from public to private control or ownership."

Steve H. Hanke, chief economist for the president's Council of Economic Advisers in 1981 and 1982, claims responsibility for popularizing the word, once an obscure term relegated to unabridged dictionaries.

Hanke said he used "privatize" in a September 1981 speech in Reno, Nev., in calling for the sale of federally owned western lands. He said he used it at the suggestion of his wife, Liliane, a French native, who coined it from "privatise," a French word with the same meaning.

The term caught on with the press, becoming a buzz-word for Reagan's policy of shrinking the federal government. It also became popular with administration officials, who used it repeatedly to describe Reagan's policies. But Hanke was not satisfied. "People opposed to the idea were saying: 'It's not even a word. It's not in the dictionary,' " he said.

So in 1983, after leaving the government, he mounted a letter-writing campaign on behalf of the word to dictionary publishers. Several dictionary editors emphasized that Hanke is not the word's only father, but he said he likes to think that he is:

"We had sold so little federal property, and I was so discouraged, and at that point, I thought I'd at least get a word in the dictionary."