What was going on when I was born?

PAUL LEWIS PARIS, May 10 - The Roman Catholic Church will pay creditors of the failed Banco Ambrosiano group $244 million, believed to represent nearly half the Vatican's liquid assets, under terms of an agreement to be signed in Geneva in two weeks, bankers close to the negotiations said today. They said the payment, due in cash on June 30, is described in documents sent to the 120 creditor banks as ''recognition of moral involvement'' by the Vatican in the loss of some $1.3 billion when the Milan-based Banco Ambrosiano group went into liquidation in 1982. (A spokesman for the Vatican said there were be no immediate comment on the bankers' report.) An important aspect of the Ambrosiano settlement, the bankers said, is that all parties have agreed that any disputes over its terms will be arbitrated before Italian courts. This would be the first time that the Vatican, which is an independent state situated in the middle of Rome, has agreed to subject itself to Italian law.

When Norman Wheeler announced the annual debate on Machiavelli to his senior social-studies class last week, Danny Goldberger at first thought of taking Machiavelli's side. If you did not side with Machiavelli, Danny reasoned, it meant you were in the same boat as Cicero, and Danny had misgivings about Cicero's idealism. ''Cicero was a little buttered over and too peachy,'' Danny said. That night, Danny talked over Machiavelli with his friend Kenny Moss when they went to see ''This Is Spinal Tap'' at the Loews Sixplex IV movie theater in Levittown. The morning of the debate, there was a rumor going around school that a classmate, Khedouri Ezair, had gone pro-Machiavelli and had taken out five extra books from the library for support. For a moment, when Danny saw the five books in biology class, he was unsure.

Friday SON OF FILM FLUBS As a sequel to its popular compilation of rare Hollywood footage last year, some from the cutting-room floor, the Thalia Theater on West 95th Street, near Broadway, has come up with ''The Rest of Hollywood Out- Takes.'' Offered as a ''sneak preview'' today and tomorrow, it includes a variety of film flubs as well as Judy Garland in screen tests for ''Valley of the Dolls,'' a film she never made; candid footage of Marilyn Monroe, Clark Gable, Montgomery Clift, Arthur Miller and John Huston on the set of ''The Misfits''; Edward G. Robinson talking French, and Lana Turner as Scarlett O'Hara, opposite Melvyn Douglas as Ashley Wilkes, testing for ''Gone With the Wind.'' Admission: $4.50 ($2.50 for children and over-65's before 5 P.M.). Information: 222-3370. A PLENITUDE OF PEONIES The peony seems to have fascinated people through the centuries, for the reputed healing powers of its strong-odored roots and foliage, and for the beauty of its red, pink or white flowers, whose fragrance resembles the rose, but is more delicate. So the American Museum of Natural History, Central Park West, at 79th Street, has opened an exhibition called ''Peonies of Greece: Myth, Science and Art.'' It includes lithographs by Takis Katsoulidis from botanical watercolors by Niki A. Goulandris. Also on view are manuscripts, woodcuts, engravings, Chinese lacquerware, pressed peonies and fresh-cut varieties. Pay-what-you-wish admission. Information: 873-1300.

A Federal district judge ruled today that radioactive fallout from above-ground nuclear tests in the 1950's caused nine people to die of cancer and that the Government was guilty of negligence in the way it conducted the tests. It was the first time that the explosions at the Nevada Test Site from 1951 to 1962 had been legally held to have caused cancers. The verdict therefore holds major implications for the outcome of half a dozen related suits pending in the courts and marks a new departure in the body of law on the harm of exposure to radioactivity. ''It's the first case where a major Federal activity involving radiation has been held responsible for harming civilians,'' said Stewart L. Udall, former Secretary of the Interior, one of the attorneys for the plaintiffs. ''I can't think of anything where the Government has been held to account like this. It makes it easier for citizens to gain redress. It opens the Pandora's box that the Government thought it could close.''

FRIDAY, MAY 11, 1984 Companies A.T.& T. was ordered to cut its long-distance rates 6.1 percent beginning later this month. The order, imposed by the F.C.C., will save consumers between $1.7 billion and $1.8 billion a year. But other actions taken by the F.C.C. will result in some increased charges for telephone users, particularly businesses. (Page A1.) The Comptroller issued a highly unusual statement denying rumors that Continental Illinois, the nation's eighth-largest banking organization, was in serious financial trouble. (D1.)

A correction published May 2, relating to an article April 30 about a New York Times/CBS News Poll concerning the prospect of a woman as Vice President, misstated some of the poll data. Among the population groups responding to such a possibility, independent men shifted to Republicans by 14 percentage points and Democratic men shifted to Republicans by 7 points.

The House gave President Reagan a major victory by narrowly approving his request for military aid to El Salvador that would give him broad discretion in spending the money. The measure was approved in the Democratic-controlled House by a vote of 212 to 208. Proponents argued against imposing human rights conditions that could not be met by a struggling new democracy. (Page A1, Col. 6.) The World Court upheld Nicaragua in ruling unanimously that the United States should halt immediately any attempts to blockade or mine Nicaraguan ports. The Court, granting Managua's request for a preliminary restraining order, also asserted by a vote of 14 to 1 that Nicaragua's political independence ''should be fully respected and should not be jeopardized by any military or paramilitary activities.'' (A1:5.)

President Reagan, expressing displeasure with ''recent upticks'' in interest rates, said today that there was ''no satisfactory reason'' for them. The President offered his first comment on the latest rise in the prime rate, to 12 1/2 percent, without repeating the criticism of the Federal Reserve Board offered Tuesday by the White House. Mr. Reagan expressed his view to the National Association of Realtors, while hailing various factors in the general economic recovery. ''We all know the overall decline of interest rates, notwithstanding the recent upticks, has also helped,'' he said. ''But let me assure you, we are not pleased with the recent increases in interest rates, and frankly there is no satisfactory reason for them.''

In a highly unusual move, the Comptroller of the Currency issued a statement yesterday denying ''rumors'' that the Continental Illinois National Bank and Trust Company, the nation's eighth-largest banking organization, was in serious financial trouble. The statement from the Comptroller, C. Todd Conover, also denied Japanese news wire reports that the Comptroller had asked Japanese or other banks or securities firms to assist Continental. ''A number of recent rumors concerning Continental Illinois National Bank and Trust Company have caused some concern in the financial markets,'' the Comptroller's Office said in its statement. ''The Comptroller's Office is not aware of any significant changes in the bank's operations, as reflected in its published financial statements, that would serve as a basis for these rumors.''

NO one loves an understudy. Their names do not appear on marquees and they have to be gleaned from the fine print in the playbill. On the rare occasion that an understudy is actually called on to play a full-scale role, audiences groan when it is announced that A. Star will not be appearing. Afterward, understudies are often remembered for who they weren't. On Sunday at 8 P.M., an event called ''Waitin' in the Wings'' will turn the tables. Current Broadway show-stoppers will be performed by the shows' understudies; some of the stars they step in for - among them Gene Barry, Charles (Honi) Coles, Colleen Dewhurst and Geraldine Fitzgerald - will introduce them. There will be selections from ''Cats,'' ''My One and Only,'' ''On Your Toes,'' ''Dreamgirls,'' ''Little Shop of Horrors,''''La Cage aux Folles,'' ''42d Street'' and eight other Broadway and Off Broadway productions, in a fully scripted, two-hour production.

MICHAEL QUINT As superintendent of the 3,100-pupil Pioneer Yorkshire Central School District, near Buffalo, Henry B. Heslop wears many hats. But one hat he would gladly give up, he says, is that of financier responsible for investing spare funds in the district's $10 million budget. Last year the district earned $300,000 by putting its idle cash to work at interest rates as high as those available to larger, more sophisticated investors. The sum was important to local citizens, who pay $3 million a year in taxes to support four schools. Statewide, the more than 700 school districts earned more than $100 million from short-term investments during 1982. But when Wall Street comes to Main Street, there can also be problems, as was learned last week when the Lion Capital Group, a small government securities dealer, filed for bankruptcy and jeopardized some $20 million in investments by more than three dozen school districts and counties in New York.

''If there is anything I can leave with you in terms of the treatment of patients with a terminal illness, it is this: We are all terminal - we all die sometime - so why should a terminal illness be different from terminal life? There is no difference.'' - Jacob K. Javits. (A18:3.)