What was going on when I was born?

The American Telephone and Telegraph Company settled the Justice Department's antitrust lawsuit today by agreeing to give up the 22 Bell System companies that provide most of the nation's local telephone service. On a landmark antitrust day, the Justice Department also dropped its marathon case against the International Business Machines Corporation, a suit Excerpts from decree, page 36. that had sought to break up the company that has dominated the computer industry. The Justice Department said the suit was ''without merit and should be dismissed.'' The A.T.& T. agreement, if finally approved by a Federal court, would be the largest and most significant antitrust settlement in decades. It is likely to be compared with the 1911 settlement that divided the Rockefeller family's Standard Oil Company into 33 subsidiaries, some of them huge oil companies in their own right.

The woman given a watch marked Cartier for her birthday was delighted. But when it stopped running a couple of months later and she took it to the store she found that it was one of the 100,000 counterfeit Cartier watches that are being sold annually in the Western Hemisphere. Her husband had paid $100 for it and it seemed a great buy, since the real tank watches cost $650 to $2,300. Counterfeiters also fake the Cartier Santos watch, although it is more difficult to do. (A genuine one costs $1,050 to $6,000.) Sales in co unterfeit jewelry are booming, on the streets, in flyby-night s tores and even, said James Bikoff, vice president and general couns el for Cartier, at housewives' sales parties, similar tothe ones at w hich kitchen ware or cosmetics are sold.

The Reagan Administration, reversing an 11-year-old Federal policy, announced today that it would no longer deny tax-exempt status to private schools, colleges and certain other nonprofit institutions that practice racial discrimination. The decision on the interpretation of the tax laws will apparently entitle more than 100 schools and other organizations whose tax exemptions were revoked in the last decade to receive favorable tax treatment as charitable organizations. It is also expected to open the door to tax exemptions for many other private segregated schools that have never had them. Justice and Treasury Department officials said that the reason for the policy change was that policies against racial discrimination should be enforced by Congress, not the tax authorities.

The settlements by the Justice Department of two critical antitrust suits promise to accelerate the communications revolution in American and worldwide. At the same time, the moves to deregulate the communications industry are likely to open up a battle royal among behemoths in the marketplace. The impact promises to be highly uneven on different customers - personal and business - and on the competitors for shares of the market in communications, data processing and the manufacture of equipment. The twin moves, announced within hours of each other, represent the most dramatic actions thus far by the Reagan Administration to carry out its philosophy that the role of the Government in the marketplace should be shrunk severely, in the belief that competition, even among giant corporations, will best serve consumer interests by increasing efficiency and stimulating innovation.

Layoffs of 460,000 workers in December pushed the nation's unemployment rate from 8.4 percent of the labor force to 8.9 percent, the second highest monthly level since the beginning of World War II. The number of unemployed Americans climbed to a nearly 9.5 million. At the same time, the total number employed last month fell to 97,188,000, a decline of 840,000 from November, when the total fell 190,000 from the preceding month. The Bureau of Labor Statistics reported today that the unemployment total, seasonally adjusted, was 9,462,000, an increase of half a percentage point above the November rate. The 8.9 percent rate for December was within a tenth of a percentage point of the postwar monthly high of 9 percent reached in May 1975 in the deepest recession of the postwar years.

Consumers could face a rapid increase in local telephone rates - possibly a doubling in certain parts of the country - and a decline in long-distance charges as a result of the Government's antitrust settlement with the American Telephone and Telegraph Company. In the past, A.T.& T.'s long-distance rates have subsidized its local service. However, as a result of the settlement, local and long-distance services will be provided by separate companies. Under the terms of the agreement, A.T.& T.'s 22 regional companies will become independent entities that must earn a profit from their local service charges.

Poland's military Government announced today that 17 people have died since the imposition of martial law, according to the Warsaw radio. The figure is more than double the number of deaths previously disclosed by the Government. The disclosure of the official death toll - eight fatalities at the Wujek coal mine and nine in Gdansk - was part of a comprehensive report on events of the last month in Poland that was presented to a parliamentary commission today by Boguslaw Stachura, the Deputy Minister for Internal Affairs. On Dec. 29 the Polish authorities announced a total of eight deaths in disturbances and strikes. On Jan. 2 a high-ranking party source was qu oted in unofficial reports reaching the West as saying two others, i ncluding a policeman, had died.

The Justice Department announced yesterday that it had decided to drop an antitrust suit that it started almost 13 years ago in an effort to dismember the International Business Machines Corporation. The move was widely anticipated. Recently numerous court decisions in antitrust complaints filed by competitors have favored I.B.M. Also, decisions in private suits against the American Telephone and Telegraph Company and the Eastman Kodak Company weakened the Government's legal position in the I.B.M. case. And I.B.M.'s dominance of the computer industry has undergone general erosion since the case was filed. The suit charged I.B.M. with monopolizing the general purpose computer market, consisting of companies that sold computer equipment, programming and services. The requested relief included breaking I.B.M. up into smaller companies.

The United States and Nicaragua were reported today to be close to announcing an exchange of ambassadors. The United States nominee is expected to be Anthony C.E. Quainton, according to Larry Birns, head of the Council on Hemispheric Affairs, a Washington-based policy lobbying group. Mr. Quainton is a career Foreign Service officer who has been director of the State Department's Working Group on Terrorism.

French officials today defended the decision to supply military equipment to Nicaragua despite expressions of concern by the United States. ''When a country such as Nicaragua applies to France for aid,'' a Foreign Ministry official said, ''it is often because it is seeking to escape dependency on one of the superpowers.'' In this cas e, the official said, French aid should enable the Nicaraguans t o lessen their dependency on Cuba and the Soviet bloc. France anno unced Thursday that it agreed last month to sell what it described as purely defensive military equipment to the left-wing Sandinist Gov ernment in Managua. The $17 million contract includes two patrol bo ats, two helicopters, a fleet of trucks and the cost of training air force and naval personnel in France.

The Sudan's four universities were ordered closed today because of recent student demonstrations and rioting over increases in the price of gasoline and sugar. The state-run Sudanese radio reported from Khartoum, the capital, that the universities would remain closed for an indefinite period ''due to recent avents which have made the atmosphere unsuitable for study.'' Several days ago, when the protests began, the nation's secondary schools were shut after rampaging students set fire to shops and gas stations.

Secretary of State Alexander M. Haig Jr. and Secretary of Defense Caspar W. Weinberger expressed disappointment and concern today over a decision by France to sell some military equipment to Nicaragua. Dean Fischer, the State Department spokesman, said Mr. Haig registered ''strong disappointment'' at a meeting here this morning with the French Defense Minister, Charles Hernu. Mr. Weinberger, who met with Mr. Hernu Thursday, said on the CBS News program ''Morning'' that he was ''extremely disappointed'' with the French decision to sell military equipment to Nicaragua, ''a country which has been heavily supported by Cuba and by the Soviet Union.'' France said Thursday that it would sell $17 million in ''nonoffensiv e'' military equipment to the Sandinist Government of Nicaragua, an d train 10 Nicaraguan naval officers and 10 pilots. The sale involves two patrol boats and a dozen trucks.