What was going on when I was born?

CHRIS CONNOR, whose career since she left Stan Kenton's band to sing with her own trio 28 years ago has been a roller coaster ride of highs and lows, is now rising on what may be the best high she has had. She has been singing on Sunday nights since September at Sweet Basil and, she says, ''I know I'm singing better than I ever did.'' The reason she can say this with such assurance is that she has turned her life around since the night less than two years ago when she walked off the stand in the middle of an engagement at Marty's, checked into a hospital and faced the fact that she was an alcoholic. ''It was a gradual thing over a period of 25 years,'' she said the other day. ''When I was with Stan Kenton's band, and for five years before that, with Claude Thornhill's band, I was the only girl on the bus and I was very lonely. But I didn't drink much. I started to drink a little bit more when I went out on my own. But I guess I really became an alcoholic in the 60's when I couldn't get work. I'd just sit home and drink.''

Ian MacGregor, the Scottish-born American who was brought back to Britain last year to try to save the British Steel Corporation, is polling his work force on what he says is a lastchance survival plan for the company. In the voting tomorrow, British Steel's 130,000 employees are being asked to approve a six-month wage freeze and the elimination of at least 20,000 jobs. And if they vote no, Mr. MacGregor said last week, it will mean that ''we are really starting the process of liquidation of the company.'' The Government-owned corporation registered a loss of $1.3 billion in the last fiscal year. Mr. MacGregor has said that the current year will be worse.

A dozen major American banks that have been negotiating secretly in New York with lawyers representing Iran and its central bank have made their ''last and best offer'' for settling financial disputes that appear increasingly interlocked with the fate of the hostages, sources close to the bank negotiations said today. But while details of the overall financial question are seen as the last remaining obstacle to a resolution of the hostage dispute, there were conflicting views as to whether the cooperation of the banks was an essential ingredient to a final agreement. In Teheran, the official Iranian press agency quoted the chief Iranian negotiator, Behzad Nabavi, as saying that the American banks have not made an ''acceptable move'' to pave the way for a transfer of the funds. He set a deadline of tomorrow for the transfer of an unspecified amount to an unspecified ''third country,'' presumably Algeria.

Iran gave the United States a formal response today to the Carter Administration's efforts to resolve the hostage crisis before leaving office. It was understood that the Iranians had proposed, in their message, a new procedure for facilitating the return to them of their assets frozen in American banks overseas, a matter that has been the subject of intense discussions between American and Iranian bank officials. Sources close to the negotiations said the Iranian response reportedly involved some ''problems'' but was regarded as ''workable.'' Differences Over Money Officials said the Iranians had asserted that they were entitled to recover about $2 billion more immediately from the overseas branches than the United States had estimated. The United States had earlier offered $3 billion immediately, with another $1.8 billion possible later.

Industrial production increased 1 percent in December, the Federal Reserve reported. It was the fifth consecutive month of production gains, after six months of declines. Economists said the rate was likely to slacken in coming months, but none foresaw a big new recession. A preliminary estimate showed 1980 industrial production to be off 3.5 percent from the 1979 total. (Page D1.) A record $2.8 billion was invested in money-market funds during the week ended Wednesday. Comparatively high yields, averaging about 17 percent, and heavy stock selling were cited. (D1.)

Chelsea is one of those delicate, almost fragile New York neighborhoods - it is defined by a few special streets and a few notable buildings, and it is possible to pass through it without knowing you have been there at all. Those elements that make Chelsea Chelsea, and not someplace else, are all subtle, and relatively easy to miss. For those certain blocks in the West 20's, the long, even grid of Manhattan stays the same as it is elsewhere, and the storefronts on 8th, 9th and 10th Avenues are not so very different from those a few blocks uptown or downtown. There is no great park, or waterfront, or monument to provide a focus and to serve as a neighborhood symbol. A traveler can pass in a taxicab from Greenwich Village to the Upper West Side and not see any part of Chelsea at all. But it is the special gift of certain Manhattan neighborhoods to reveal themselves only from within. On Chelsea's streets -which for these purposes are the blocks between 7th and 10th Avenues and 19th and 23d Streets - there is a remarkable mixture of buildings, including some of the Metropolitan Baedeker finest 19th-century town houses in Manhattan; there are superb apartment houses of all generations, and there are shops and cafes. And there is a seminary that, from the standpoint of design at least, is one of the most special places in Manhattan.

THEIR ELDERS PROMISE THEY WON'T FORGET By DENA KLEIMAN Yesterday was the Rev. Dr. Martin Luther King Jr.'s birthday - he would have been 52 years old - and in classrooms and school auditoriums throughout New York City, schoolchildren too young to remember him were taught who he was. It was a lesson about a great man and, for those who had not yet been born while he lived, a perplexing glimpse into America's past as well. Words like segregation, civil rights, civil disobedience were scrawled on blackboards and defined like a new vocabulary. Prejudice, protest, pride, boycott, sit-in, dream - all took on new meaning.

The Acting Company - the official touring arm of the John F. Kennedy Center in Washington - is taking an 18th-century farce on the road, starting with preview performances tonight at 8, tomorrow at 3 and 8, at the Lehman College Center for the Performing Arts. The play, ''Il Campiello, a Venetian comedy by Carlo Goldoni, deals with the inhabitants of a poor piazza who fill their days with dance, gossip, squabbles, stories and matrimonial scheming. It's directed by Liviu Ciulei, artistic director of the Guthrie Theater in Minneapolis. Tickets are $8 and $9. The college, in the northwest Bronx, is near subway and express bus stops. Information: 960-8833. RETURN OF A 1300'S POET Guillaume de Machaut - 14th-century poet, composer and priest - will come to life at Symphony Space, Broadway and 95th Street, tonight at 8, when Music for a While presents ''La Fontaine Amoureuse,'' a costumed entertainment, with Machaut's words and music, and instruments like those of 14th-century France. An actor, John Genke, will portray Machaut, joining the four members of Music for a While - LaNoue Davenport, Judith Davidoff, Christopher Kenny and Sheila Schonbrun. The concert is the first of three. Tickets, $6 ($5 for students and the elderly); series subscription, $15. Reservations: 582-6464.

The attorney for the American Telephone and Telegraph Company, responding to the Justice Department's opening charge today in its huge antitrust suit against A.T.&T., said the department was deliberately trying to destroy ''the greatest enterprise on earth.'' Lawyers for the Justice Department had accused the Bell System of using its size and power to foster a monopoly. In six hours of opening discourse in United States District Court, George L. Saunders Jr. for Bell and Gerald A. Connell for the Justice Department laid out the dimensions of the arguments that are expected to unfold in the coming months.

U.S. envoy's parting advice to Reagan: Court Canada A2 Panel calls on Soviet to reopen case of Swede who aided Jews A3 Italian police continue search for freed magistrate's abductors A3 In Polish provincial town, strikers demand union for farmers A3 Around the World A5 Marcos expected to lift martial law within days A7 Government/Politics Koch expected to call for rise in street-cleaning force B3 D'Amato's name comes up at extortion trial B4 Senate committee overwhelmingly backs Haig nomination B5 T.H. Bell wins Senate panel's approval as Education Secretary B5 Energy Two are accused of overbilling New York City for fuel oil B3 General Around the Nation A12 Puerto Rican groups concentrate attacks on U.S. military A13 Tarnower's bloodied pajama top shown to back defense B2 3,500 fellow officers pay tribute to slain New York policeman B3 New Staten Island ferryboat fails trials in Gulf of Mexico B3 Tens of thousands march in the nation to recall Dr. King B4 Obituaries George Skibine, dancer, choreographer and company director D17 PARKING REGULATIONS Because of forecasts of snow, alternate-side parking rules are suspended in New York City today. All other parking regulations remain in effect. jv46.1 Weekend Events: Weekender Guide C1 Exploring New York's Chelsea, an area on the way up C1 Lots to see, do and buy in the new Chelsea C16 Theater: Broadway C2 Eva Le Gallienne play opens C3 ''Cymbeline'' in Hartford C4 Screen: At the Movies C6 ''Let There Be Light,'' Huston documentary C6 ''Fish Hawk'' at the Guild C8 ''Mountain Family Robinson'' opens C10 Music: Chris Connor back in town C1 Ruth Laredo at Carnegie Hall C5 Leo Smit marathon at Goodman House C5 The Pop Life C7 Art: ''Russian Revolution'' at Rosa Esman Gallery C1 Auctions C17 Max Weber show at Forum C18 Art People C20 Books: ''Ambition'' by Joseph Epstein reviewed C22 ''Other People's Worlds,'' by William Trevor reviewed C22 Publishing C24 A guide to Chelsea restaurants C1 TV Weekend C24 Style The Evening Hours D15 New Yorkers gearing up for the inaugural whirl D15 Parents are encouraging bilingualism from infancy D15 Sports Connors and Lendl gain semifinals of Masters at Garden A15 Seclusion fuels Hagler's desire to retain title A15 Bob Gibson lone victor in his first Baseball Hall of Fame vote A15 Belmonte tape played at racing board hearing A16 Red Smith on Gibson, the Deity A17 Lietzke leads Hope Desert Classic by 2 strokes with 131 A21 Features/Notes Notes on People A20 D16 * Man in the News: William Emerson Brock 3d B5 News Analysis Steven Rattner examines Carter's last budget B6 Editorials/Letters/Op-Ed Editorials A22 The President's report card Soviet gas won't choke the allies Bill Brock's plum Topics: rarities Letters A22 Tom Wicker: Carter's failure was a failure of politics A23 Flora Lewis: the danger in sleeping with elephants A23 Enrique Arroyo: the urban non-policy of the United States A23 Philip M. Stern: reining in the Federal Reserve Board A23

International The way for release of the hostages may have been cleared by Iran's latest formal response to the Carter Administration's efforts to resolve the 14-month crisis before leaving office Tuesday. Publicly, the Administration was unwilling to predict a breakthrough, but one official said the message indicated that a speedy settlement was possible. (Page A1, Column 6.) A demand for Iran's frozen assets was pressed by the chief Iranian negotiator in the talks over the release of the 52 Americans. Hours after Ayatollah Ruhollah Khomeini apparently approved the latest efforts to resolve the crisis, the negotiator hinted that unless Washington deposited the unencumbered assets in Algerian banks by the close of business today Iran might break off the talks. He also said that the money must be in the Algerian banks before the hostages are freed. (A1:5.)

By HILTON KRAMER HAVING long been denied a comprehensive view of Russian modernism - the avant-garde art that flourished so amazingly in the years just before and after the Revolution of 1917 - are we now in any danger of suffering from a surfeit of this once rarely seen material? I doubt it. Despite the immense ''Paris-Moscow'' exhibition in Paris two years ago and the very fine survey of ''The Avant-Garde in Russia: 1910-30'' at the Hirshhorn Museum in Washington (through Feb. 15), we are all still in the process of acquainting ourselves with the achievements and the vicissitudes of this movement. Its contribution to abstract art in the very first decade of abstraction - roughly, the years 1913-23 - turns out to be far greater, both in quality and in scope, than earlier historians of modernism quite realized. Even the names of some of the significant artists are still new to us. Many ideas still considered new and daring by abstract artists in our own time had their origin in this movement.