August 5, 1982

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 The Reagan Administration had rescinded the regulation requiring the devices to protect automobile occupants, saying it would cost consumers and the financially troubled auto industry about $1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.)