What was going on when I was born?

An aging water main burst on the East Side at 6:15 A.M. yesterday, flooding streets, knocking out major subway lines and snarling traffic during the morning rush. Water and telephone service were disrupted for hundreds of customers in the flooded area around Fifth Avenue and 23d Street. Commuters were forced to wade to work. The 44-story headquarters of the Metropolitan Life Insurance Company, at 1 Madison Avenue, was closed, and 5,000 of its workers were sent home. Steam was cut off to four other office buildings, leaving them without air- conditioning or hot water. Two bank branches were shut down much of the day.

The special counsel to a House subcommittee said today that the panel had yet to decide how to resolve conflicting accounts by two senior Administration officials over how Ronald Reagan's campaign obtained President Carter's political strategy papers in 1980. James Hamilton, a Washington lawyer who is special counsel to the House Subcommittee on Human Resources, voiced doubt about the effectiveness of using polygraph tests to clear up discrepancies in the accounts of James A. Baker 3d, the White House chief of staff, and William J. Casey, Director of Central Intelligence. Although the Federal Bureau of Investigation has not ruled out the use of the lie-detector tests later in its investigation, Mr. Hamilton said his experience with the device in other Congressional investigations had raised questions in his mind about its usefulness. 'Need a Lot of Spadework' At a breakfast meeting with reporters, Mr. Hamilton said the subcommittee had not interviewed either Mr. Baker or Mr. Casey. ''We need to do a lot of spadework before doing that,'' he said.

New-car sales continued to show year-to-year gains in the mid-August period, with the Big Three auto makers today reporting a 19.8 percent improvement from the same period in 1982. But the rate of recovery from depressed levels a year ago has slowed because of low dealer inventories and the elimination of incentives for buyers. The seasonally adjusted annual selling rate for all the major domestic auto companies, which is the broadest measure of the overall health of the industry, was 6.2 million units in the Aug. 11-20 period, compared with 7.9 million in early August and 5.1 million in mid-August of last year. The companies had been selling cars at rates of more than 7 million units since late May.

Mitsubishi Bank's $282 million bid for the Bancal Tristate Corporation underscores the growing presence of the Japanese in California banking. Total Japanese-held banking assets in the state at the end of last year amounted to $7.5 billion, matching those of California's sixth-largest bank, the Union Bank. The acquisition of Bancal, parent of the Bank of California, will add $3.9 billion. California offers distinct attractions to the Japanese banking industry. A rich lode of consumer deposits, it is also the key location for trade with Asia.

An article in Business Day Saturday misidentified the manufacturer of Bubblicious gum. It is made by the Warner-Lambert Company.

There has been no lack of studies showing that Japanese automobiles and electronic equipment are generally higher in quality than their American competitors. But now comes a Harvard Business School study that has American room air-conditioner manufacturers up in arms because it concludes that the Japanese make a vastly superior product in that line as well. More than that, the study contends that Japanese manufacturing in general produces products that are far superior to their American rivals because of worker participation in quality control and intense attention to quality problems by top executives in Japan - not any technological edge. ''This should be a warning bell to American management,'' said Jackson Grayson Jr., who heads the American Productivity Center in Houston and has taught at several leading business schools.

The Economy New-car sales by the Big Three auto makers rose 19.8 percent during the mid-August selling period, a slower pace than earlier. Ford's sales were up 23.6 percent, while Chrysler reported a 19.2 percent rise and G.M. one of 18.5 percent. The annual selling rate for all domestic companies dropped to 6.2 million units from 7.9 million units in early August. Analysts cited a shortage of cars and the elimination of most incentive programs. (Page D1.) The Federal Home Loan Mortgage Corporation said some homeowners have been overcharged by lenders when the homeowners assumed mortgages. The corporation, which owns about 1.6 million mortgages, wasn't sure how many overcharges had occurred. It asked homeowners who felt they might deserve a refund to call its Washington headquarters. (D1.)

The Finance/New Issues report in Business Day Tuesday misstated the number of shares in a proposed stock offering by Medmaster Systems Inc. It is 700,000.

The Federal Communications Commission yesterday ordered the Harris Corporation to halt production of a device that permits monaural AM radio stations to broadcast in stereo and to notify its customers to shut their units down. The order affects 71 radio stations around the country that have purchased the $10,000 units from Harris and means that they must revert to monaural broadcasting pending further regulatory action. It does not force the stations off the air, however.

MANY brownstone gardens are both an asset and a problem: they promise to bring outdoor space into the lives of nature-starved New Yorkers, but the spaces themselves are usually small and sometimes damp, and they often lack light and privacy. The high canopies of the aspiring ailanthus and other city trees compound both the promise and the problem of a back garden by providing greenery that obscures the sun. Designing the garden of a brownstone is something like writing a haiku: there are strong constraints, especially on space, and success can turn on a nuance, such as the proportion of light to shade. Alice Recknagel Ireys, a Brooklyn Heights landscape architect, says, ''You have a small rectangle, and it's a question of how you divide it.'' There are, however, many ways to design successfully within this constrained form. Some gardens look as though they are excerpts from a forest; others have constructions of terraces, pavilions or trellises; still others are totally decked, both floor and fence. Designing is especially difficult when the yard requires remedying problems that lie beyond the fence, in other yards. Success sometimes depends on the cooperation of neighbors.

A year after the Manville Corporation said it was ''completely overwhelmed'' by asbestos-related lawsuits and obtained protection under the Federal bankruptcy laws, its business has surged and it has acquired a huge portfolio of cash and marketable securities. Tomorrow will be the first anniversary of the bankruptcy filing by Manville, a Denver-based manufacturer of building products and the nation's largest asbestos producer. The company has yet to submit a formal plan to the court for a reorganization that would enable it to emerge from bankruptcy protection, pay off its debts and settle claims against it filed by thousands of Americans suffering from asbestosis. More than half the victims of the disease, a respiratory ailment resembling emphysema, say they have traced their problems to their work with Manville-produced asbestos in shipyards during World War II.

The Manhattan water-main break yesterday was the second major one in two weeks in a vast, aging system of pipes in a violent underground environment of subway and street traffic vibrations. Officials said yesterday that until the maintenance and replacement program for the pipes was improved, more ruptures like those of the last two weeks were inevitable. ''We're always going to have water- main breaks,'' said Joseph T. McGough Jr., Commissioner of the Department of Environmental Protection. ''We would like to see more money so that we can pursue replacing the water mains.''