What was going on when I was born?

The board of the Island Trees Union Free School District, whose banning of nine books from school libraries nearly seven years ago touched off a national controversy, voted tonight to return the books to the shelves. But the board said in a formal statement that librarians would be required to send notes to parents whose children check out the books in the four Nassau County communities it covers. The board's removal of the books, which include ''The Fixer'' by Bernard Malamud, which won the Pulitzer Prize for fiction in 1967, and ''Slaughterhouse-Five,'' by Kurt Vonnegut Jr., had been challenged by five students. In late June, the United States Supreme Court ruled that a trial was warranted to determine whether the board's action had violated the students' First Amendment rights to freedom of speech.

A House-Senate conference committee broke a two-day deadlock on welfare spending tonight, then resumed deliberations on other features of the bill to raise $98.9 billion in additional tax revenue over the next three years. The session was expected to last through much of the night, and Senator Bob Dole, Republican of Kansas and chairman of the conference committee, said he hoped the panel would complete its work on Friday. In only 30 minutes, the committee completed approval of the entire spending portion of the bill, which would cut spending by $17.5 billion over the next three fiscal years, somewhat more than the $16 billion the committee had been asked to cut. The panel then moved directly to the tax portion of the bill, but its progress was slow as it moved from one provision to the next, deferring action on many of them until later in the night.

DESPITE the recent slowdown in the art market, the art scene in the Hamptons on the east end of Long Island has been expanding at a phenomenal pace. In the 1970's, there were at most half a dozen galleries in Southampton, Bridgehampton, East Hampton and Amagansett. Now there are 16. The number of artists in the Hamptons has not so much grown as multiplied. ''In 1978 we had to spend a long time finding artists to show,'' said Jim Wilson, director of the Peter S. Loonam Gallery on Main Street in Bridgehampton. ''Now the gallery looks at the work of 400 to 500 artists a year.'' The 1981-82 gallery explosion reflects two key developments. For the first time, New York City galleries are entering the Hamptons market: four of the eight galleries that have opened in the last two seasons are based in New York City. Also for the first time, there is a widespread attempt to exhibit and deal in crafts.

Wall Street was shaken again yesterday by the failure of a littleknown government securities firm, Lombard-Wall Inc., and its wholly owned subsidiary, Lombard-Wall Money Markets. In a bankruptcy petition, Lombard-Wall Inc. listed debts of $177.2 million to its 10 largest unsecured creditors. The two biggest were the Chase Manhattan Bank, which was owed $45 million, and the New York State Dormitory Authority, which was owed $55 million. The authority is a public agency that issues bonds to finance dormitory construction at state institutions. Chase recently suffered a major loss from its involvement with another of the numerous small firms that participate in the huge market for trading government securities. In May, Chase declared a pretax loss of $285 million as a result of the failure of Drysdale Government Securities, which the bank had served as a middleman. Chase was forced to pay out this money after Drysdale failed to pay interest owed on Treasury securities that it had borrowed from other firms.

Federal Judge Harold H. Greene has won broad praise for his Solomon-like decision ordering changes in the proposed antitrust settlement reached by the American Telephone and Telegraph Company and the Justice Department. The 10 changes he proposed will appease the many powerful and noisy political and industry groups that were unhappy with the settlement, it is felt, managing at the same time to respect the interests of A.T.& T. and the Justice Department enough to preserve the agreement. ''I think the decision was just breathless,'' said Thomas J. Casey, a Washington lawyer and former deputy chief of the common carrier bureau of the Federal Communications Commission. ''It showed a remarkable sensitivity to a whole calculus of factors.''

European officials, angered by President Reagan's ban on pipeline equipment sales to the Soviet Union, delivered a formal protest today charging that the ban was an unacceptable interference in European Economic Community affairs. The long-expected formal protest adds to the pressure on the Administration to reverse the ban. Several European governments have announced that they will defy the ban, and the House Foreign Relations Committee, dominated by Democrats, voted on Tuesday in favor of a bill that would require the President to cancel the sanctions, which were imposed last December in response to the military crackdown in Poland. Otto Borch, Denmark's Ambassador to the United States, and Roland de Kergorlay, head of the Community delegation here, delivered the legal papers to Text of the message. Page A4. officials at the Commerce and State departments. They asked that the Administration cancel the restrictions.

The affairs of a Saudi Arabian money-changer who apparently lost millions of dollars speculating in gold and silver are under scrutiny by a Government-appointed committee, according to British and Saudi Arabian officials. The appointment of the committee has raised modest hopes among creditors located mostly in Belgium and Britain that the debts of the Abdullah Saleh al-Rajhi Company - perhaps as much as $300 million - may be repaid. Until the appointment of the committee by the Saudi Arabian Monetary Authority, the closure of the company in mid-July after a year of difficulties had sent the creditors scurrying to protect the collateral they had for their loans. Company Closed for Audit ''The company was closed down temporarily to see if its assets are enough to cover its debts,'' a foreign diplomat in Riyadh said in a telephone interview. ''It may have sufficient assets to pay off its debts.''

International Israeli jets bombed west Beirut for 11 hours, and the Lebanese authorities responded by suspending the negotiations on a withdrawal of Palestinian guerrillas from Lebanon. A source involved in the talks said that the key Lebanese intermediary had telephoned Philip C. Habib, the special United States envoy, as the Israeli jets were overhead and told him to ''go home.'' (Page A1, Column 6.) Israel halted the bombardment of west Beirut after a stormy confrontation between the Cabinet and Defense Minister Ariel Sharon, who had ordered the raid. Israeli radio and television reported that the American Ambassador had delivered a message to Prime Minister Menachem Begin during the meeting warning that if the bombing was not halted, the special American envoy, Philip C. Habib, would drop his efforts to negotiate an end to the siege of Beirut. (A1:3.)

The Security Council renewed its demand that Israel permit United Nations officers to monitor the recurring cease-fires in Beirut. Page A6. BEIRUT, Lebanon, Aug. 12 - Israeli jets bombed west Beirut for 11 hours today, and the Lebanese authorities responded by suspending the negotiations on the withdrawal of Palestinian guerrillas from Lebanon. The key Lebanese intermediary in the negotiations, former Prime Minister Saeb Salam, called the special United States envoy, Philip C. Habib, as the Israeli jets were overhead and told him to ''go home,'' according to a source involved in the negotiations.

Nobody disappears by following the Bermuda Triangle - a three-piece music group that has fervent fans and that plays rock, bluegrass, country and other styles. Bermuda Triangle and Andy Breckman, who sings and writes comic songs, will be at Folk City, 130 West Third Street, tonight at 9 and midnight in the penultimate program of the New York Folk Festival. Winding up the festival tomorrow, also at 9 and midnight, will be Happy and Artie Traum, guitar-playing brothers, and Rod McDonald, a Greenwich Village singer and songwriter. Admission is $6. Information: 254-8449. FRIDAY THE 13TH MAGIC Meir Yedid can make his fingers disappear one at a time, or so it may seem, and Friday the 13th might be an appropriate occasion to watch such mysterious goings on. Mr. Yedid and four other magicians will be at the Magic Towne House, 1026 Third Avenue, north of 60th Street, tonight and tomorrow and every weekend this month from 9:30 to well past midnight, and each will do his tricks the hard way, with audiences of 50 or fewer gathered close in tiered seating around him. Among the things you may think you see are a handkerchief pulled through a chair leg and a sword put through someone's neck. Admission, which includes a buffet, tax and tip, is $17.50 on Fridays and $20 on Saturdays. Reservations: 308-2733.

The Colin, Hochstin Company, a Wall Street brokerage firm, said yesterday that Justin Colin, a senior partner, had filed for voluntary reorganization in the United States Bankruptcy Court and had resigned from the firm. Roger J. Hochstin, also a senior partner, said in a statement that the brokerage firm was not a party to the reorganization. He said that the company was in compliance with the net capital requirements of the New York Stock Exchange and other self-regulatory organizations to which it belongs. The New York Stock Exchange said that it was examining the condition of the firm as a result of the bankruptcy filing and that, pending completion of the examination, it had temporarily reassigned 27 stocks in which Colin, Hochstin makes a market. The specialist for the stocks temporarily will be Spear, Leeds & Kellogg.

Chronology of Crisis About 6 A.M. (midnight Wednesday, New York time) - Israelis begin bombing west Beirut. As raids continue, Lebanon's Prime Minister, Shafik al-Wazzan, tells Philip C. Habib, the special American envoy, that the talks cannot continue. 2 P.M. (8 A.M., New York time) -The Israeli Cabinet meets. A message from President Reagan arrives, expressing ''outrage'' and, reportedly threatening to halt the Habib mission. The Cabinet decides to end the raids and order new ones only if they are ''essential.''