What was going on when I was born?

WHEN Betsy Brown sat at her loom in her Connecticut home in the late 1700's, she could never have imagined that the blue-and-white blanket she was working on would one day become a part of the Metropolitan Museum of Art's American Wing collection. Even more farfetched would have been the idea that, nearly two centuries later, her simple windowpane-check design would be translated into a wallpaper to decorate American homes. But ''Betsy Brown's Blanket'' - part of the Hinson Collection produced in collaboration with the Metropolitan Museum - is just one of hundreds of documentary wallpaper designs now available. A documentary wallpaper is one derived from a historical source, most often a piece of wall-paper, a fabric, a quilt or a stencil. By early fall, several more wallpaper collections will be available, with the endorsement of the Museum of American Folk Art (New York), Historic Charleston (South Carolina), the Shelburne Museum (Vermont), the Winterthur Museum (Delaware) and the Cooper-Hewitt Museum (New York). These collections will join those introduced earlier this year by the Metropolitan Museum, the Historic House Association of America and the Victorian Society in America. Other collections, such as those from Old Sturbridge Village (Massachusetts), Greenfield Village (Michigan) and Colonial Williamsburg (Virginia), have been available for several years and are periodically revised. In addition, many manufacturers offer individual documentary wallpapers, some originally produced for restoration projects.

All new automobiles sold after September 1983 must be equipped with air bags or automatic seat belts, a Federal appeals court ruled today. The Reagan Administration had rescinded the regulation requiring the devices to protect automobile occupants, saying it would cost consumers and the financially troubled auto industry about $1 billion annually. Administration officials had cited the revocation as the centerpiece of their program of regulatory relief for businesses. May Appeal to Supreme Court In its ruling today, the United States Court of Appeals for the District of Columbia said the Administration's only alternatives to enforcing the regulation were to ask the United States Supreme Court to overturn the ruling or to ask Congress to pass new legislation.

Crimes against teachers and other staff members in New York City's public schools have declined significantly for the first time in the decade that the United Federation of Teachers has kept such statistics. Figures provided yesterday by the teachers' union for the school year that ended in June show a drop of 22 percent in assaults, robberies, larcenies and other reported incidents, to 2,730 cases from 3,534. ''Together with the upturn in our reading and math scores, this should tell the public that most New York City schools are pretty safe places where learning can and does take place,'' said Albert Shanker, president of the federation. 1,639 Attacks Reported The group has regularly expressed its outrage at violence in the schools and has urged that the buildings be made safer. A similar decrease in crime was revealed in figures compiled by the Board of Education. The board's figures showed a decrease in crime not only against teachers, but also against students, principals and others in school buildings.

The decline in stock prices accelerated yesterday as the Dow Jones industrial average plunged 12.94 points, to 803.46, a four-week low. The drop marked the Dow's biggest loss in more than five months. Analysts said a variety of worries contributed to the erosion of investor confidence, including reaction to an apparent leveling off of interest rates. On the domestic front, the market drop also reflected concern over the slack economy and the uncertain fate in Congress of a tax bill intended to reduce deficits by raising $98.5 billion during the next three fiscal years. Overseas, worries centered on the intensified Israeli attacks on Beirut.

The decline in stock prices accelerated, with the Dow Jones industrial average falling 12.94 points, to 803.46. That was its biggest loss in more than five months. Volume was moderate, but traders predicted it would pick up today. Analysts cited concern about the economy and about the intensified Israeli bombing of Beirut. (Page D1.) Stock-index futures prices were also sharply down. (D10.) Interest rates were mixed as the Treasury sold $5 billion of 13 3/4 percent notes due in May 1992 at an average yield of 13.69 percent. (D9.) The dollar continued its rally in foreign currency trading. Gold prices rose $4 an ounce, to $346, in New York. (D10.)

Prime Minister Menachem Begin indicated today that Israel would continue the siege of west Beirut as it saw fit, regardless of international criticism. ''Nobody should preach to us,'' Mr. Begin said, addressing 200 American members of the United Jewish Appeal who are visiting here. ''Yesterday, the terrorists broke the 10th cease-fire, so of course we should hit back,'' Mr. Begin said, referring to the heavy fighting Tuesday night and today. ''When the Israeli Defense Force hits back, they hit hard.'' (Addressing representatives of Jewish organizations in New York, Israel's Foreign Minister, Yitzhak Shamir, sought to minimize differences with the United States over the advance into west Beirut. Page A14.)

A plot to steal more than $10 million worth of paintings - nine by French Impressionists and one by Whistler -from a small museum near Hartford was foiled yesterday, according to Federal agents. They said the plot involved a group of men who planned to hide the art in New York City, fly to London and begin trans-Atlantic negotiations for a ransom through the Metropolitan Museum of Art. Agents of the Federal Bureau of Investigation in Florida also announced the recovery of two paintings by Peter Paul Rubens, valued at $1.4 million, which had been stolen from a home in Fort Lauderdale two years ago, according to Bernard A. Feeney, the agent in charge of the F.B.I. in Connecticut. The robbery plans, which the F.B.I. said had been under way for three years, began to unravel a week ago when the would-be thieves unwittingly hired an undercover F.B.I. agent to steal the paintings at gunpoint from the Hill-Stead Museum in Farmington, Conn.

in a fairly stately fashion, sometimes in a dress, sometimes in a bathrobe, but never in jeans - between her pale pink house and her gray and red stables. A couple of miles away in this green and verdant area of Dutchess County, Oakleigh Thorne also raises horses. He doesn't ride; he runs alongside when his wife is fox hunting, and he is frank to acknowledge that what he doesn't know about horses would fill several books. But, he says, he's learning. Horses do not yet monopolize the farms and estates here, but since New York State began offering incentives to develop thoroughbred breeding, they have played an increasingly important role.

Not long ago, a cartoon in Asahi Shimbun, a leading Japanese newspaper, showed Ronald Reagan, his sleeves rolled up, pummeling small, mole-like creatures with a huge mallet. The small creatures, of course, were supposed to be Japanese companies, and the idea was to depict what trade specialists call ''Japan bashing,'' or punishing Japan for the success of its export drive. Although as political caricatures go, this one was singularly unsubtle, it did capture the sense of aggrieved innocence that many Japanese are feeling these days over recent moves by the United States Government against Japanese companies. Accused of Thefts On June 22, employees of Hitachi Ltd. and the Mitsubishi Electric Corporation were charged with conspiring to steal computer secrets from the International Business Machines Corporation.

International Israeli forces rained shellfire all across west Beirut as Israeli armored units pushed toward Palestinian refugee camps and neighborhoods on the southern outskirts of the city. The state-run Beirut radio said civilian casualties were ''in the hundreds.'' The daylong pounding by Israeli planes, gunboats and artillery brought to a halt the American-led negotiations for a peaceful withdrawal of the 6,000 Palestinian fighters trapped in west Beirut. (Page A1, Column 6.) President Reagan appealed directly to Prime Minister Menachem Begin to observe a cease-fire in Beirut. Mr. Reagan made the appeal as the Administration weighed the possibility of imposing unspecified sanctions against Israel in the deepening Lebanon crisis. (A1:3-5.)

With 1982 sales already shredded by deep consumer resistance to showroom prices, the nation's automobile manufacturers are planning their smallest price increases in years for the 1983 models, according to preliminary notifications sent to dealers in recent weeks. The General Motors Corporation began notifying its dealers in late June that there would be no price increases, at least initially, on its small, front-wheel-drive cars in the ''X,'' ''J'' and ''A'' lines, nor on the Chevrolet Chevette and the comparable Pontiac T-1000. And it said increases on the rest of its line, with the exception of the Chevrolet Corvette, would be limited to 2 percent. Following G.M.'s traditional price leadership, Ford, Chrysler and American Motors notified their own dealers that they would keep their average price increase to under 2 percent. Final retail prices will not be annnounced until the 1983 models are introduced, starting in September and October, but they usually are very close to those signalled in advance to dealers.

New car sales by the nation's Big Three auto manufacturers fell 6.8 percent in the July 21-31 period, the companies reported today, to 181,144 from 194,376 in the similar 1981 period. The Ford Motor Company reported the only sales gain in the late July period, a 21.7 percent increase, while the General Motors Corporation reported a 16.1 percent decline and the Chrysler Corporation said its sales fell 7 percent. Analysts attributed Ford's sales gain to accelerated buying before the ending of that company's incentive program on July 31. Under the program, consumers were entitled to free maintenence and small rebates on selected models.