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Volcker choice a boost for allies, Wall Street -- and the President

The reappointment of Paul A. Volcker as chairman of the Federal Reserve Board marks another stage in the maturing of Ronald Reagan as President of the United States.

Mr. Reagan brushed aside whatever temptation there may have been to ''have his own man'' at the Fed to take the course most observers thought would be best for the country.

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By naming Mr. Volcker to another four-year term as head of the nation's central bank, the President signals to Americans and the world US determination to fight inflation - even at the risk of higher interest rates that might slow economic recovery. Everything in Volcker's history indicates that he will not hesitate to clamp down on the money supply if he feels that an accelerating economy is beginning to rekindle inflation.

The world debt crisis, which finds a number of developing nations unable to meet their obligations, is thought to have played a major part in the Volcker choice. More than any other world banker, Volcker plays a central role in putting together financial rescue packages for Brazil, Mexico, Yugoslavia, and other heavily burdened debtor lands.

''The debt situation,'' Treasury Secretary Donald T. Regan told reporters the day before Volcker was renamed, ''remains worrisome.''

''People who worry about whether Brazil will make it,'' says Robert Solomon, ''or who worry about inflation, can only welcome the Volcker reappointment.

''The dominant concern in choosing the Fed chairman,'' said Mr. Solomon, author of the acclaimed ''The International Monetary System'' and a former high Federal Reserve official, ''is the international debt crisis - the need for continued management of the debt problem. We need Volcker for that.''

In the end, the President's choice reportedly narrowed to two men - Volcker and Alan Greenspan, head of the economic consulting firm Townsend-Greenspan and former chairman of the Council of Economic Advisors (CEA) under President Gerald R. Ford.

''So far as domestic policy is concerned,'' said a banking source, ''you can't find a cat's whisker of difference between Volcker and Greenspan.''

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Both men, in other words, believe that high inflation is ruinous to society and, as Fed chairman, would promote anti-inflationary policies, however politically unpopular these might prove to be. In this sense, according to those who know him well, Mr. Greenspan - though closer personally to Reagan than Volcker is - would have been a sturdily independent chairman of the Fed.

''Overseas,'' said the banking source, ''the view is different. Greenspan is not as well known as Volcker, nor is he immersed in the ongoing debt problems of the international banking system.''

''It is a mystery,'' said an ambassador of a major Western nation, ''why the President waited as long as he did. To non-Americans, Volcker was the obvious choice.''

To some observers, the President's decision emphasizes Mr. Reagan's gradual shift toward a more pragmatic economic policy for his administration.

When the President came into office at the beginning of 1981, his administration was studded with highly vocal supply-side advocates, who helped to shape and color Reagan's fiscal policies. Gradually, as time wore on, these people either were eased out of the adminstration or their counsels were muted. This also was true with those holding extreme monetarist views.

Then the President chose Martin S. Feldstein of Harvard University to replace Murray Weidenbaum as chairman of the CEA. Mr. Weidenbaum had resigned, refusing any longer to put his name to White Hoouse economic forecasts which he considered to be too rosy.

Mr. Feldstein, eliminating much supply-side verbiage from CEA forecasts, ushered in an era of sober White House economic reporting. Among other things, Feldstein praised Volcker's austere battle against inflation at the Fed. Selection of Volcker assures the financial markets that the lodestar of Fed policy will remain a determined effort to combat inflation. This assurance, initially at least, may extend Wall Street's current surge and perhaps halt the rise in interest rates.

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