March 9, 1986

IT was a cold morning at Milford Harbor, not exactly weather for swimming, but just fine for catching oysters. And yet Larry Williams's boat, the Half Shell, remained moored at the city dock. On deck was a spray-painted sign that read, ''Out of Business.'' Mr. Williams went back into business last week, when he and Milford's other independent shellfishermen returned to oystering in Long Island Sound after a 10-day closing. But he has put the Half Shell up for sale.

EACH day as Andrew Mellon had his hair trimmed in the anteroom outside his second-floor office, he would peer down into the marble lobby of the Pittsburgh bank his father had founded. When an important customer walked in, he would jump out of his chair, run down a flight of stairs and greet the visitor. That was at the turn of the century, when the entrepreneurial Mellon family was straining for new business at its bank, helping to establish such American institutions as Gulf Oil, Alcoa, Koppers, Carborundum and New York Shipbuilding. As those companies grew so did the Mellon Bank, and soon it became the symbol of the city's wealth, power and, many would say, arrogance. For years, Mellon was entrenched in Pittsburgh's economic heart -until wrenching economic changes sent its major smokestack customers into disarray and the changing needs of its traditional customers forced it to devise new strategies. As deregulation began sweeping across the country, Mellon saw mergers with other banks as a solution to its problems.

AS President Reagan leaned on Congress last week to back increased American involvement in the guerrilla war in Nicaragua, the insurgent army the Administration hopes will topple the commandantes in Managua languished in Honduras, apparently no longer a match for the Sandinista troops. In Washington, beseeching Congress with rhetoric, Mr. Reagan and his aides sought $100 million for the rebels, $70 million of it in military aid. Mr. Reagan said the choice was one of supporting him or the Communists. Responding to the Administration's campaign, Representative Michael D. Barnes, a Maryland Democrat, said the President and his assistants were committing ''the moral equivalent of McCarthyism.'' By the end of the week, five House committees had voted on the aid, and the score was 4-1 against the President. A vote of the full House is scheduled March 19.

THE West 96th Street barrier is falling. Take, for example, Lee and Beth Stanton, both architects in their early 30's, who moved last week from a striking loft in the heart of TriBeCa to a stylish, but traditional, three-bedroom apartment at West End Avenue and 99th Street. Or consider the Concordia, a 19-unit cooperative at 107th Street and Central Park West, which opened its sales office late last month and already has attracted 50 prospective buyers. Both the Stantons and the buyers in the Concordia are new Manhattan pioneers, a vanguard that is crossing the old 96th Street frontier that once divided the trendy Upper West Side from the troubled Upper Upper West Side. They are breaking down yet another psychological wall in the city's real-estate market and helping to create a vibrant new neighborhood.

WHEN the Archbishop of Manila, Jaime Cardinal Sin, raised his hand in benediction at a huge outdoor thanksgiving mass last Sunday in honor of the new President, Corazon C. Aquino, his thumb and index finger seemed almost automatically to form the ''L'' sign that was her campaign symbol. And when, after what seemed to be months of containing himself, he broke into his mass to lead the crowd in a chant of ''Cory, Cory, Cory,'' he left no doubt where his sentiments lay. Since the start of her campaign, Mrs. Aquino has had the increasingly open support of the Roman Catholic Church, the religion of 85 percent of the population. Facing the organized political machine of President Ferdinand E. Marcos, the church's nationwide infrastructure became in effect her infrastructure. Barred from equal access to the mass media, she relied on the pulpits of the nation, which became her pulpits.

People in France, Britain and West Germany say they believe American military action against international terrorism would only make the problem worse, even though they are dissatisfied with their own Governments' handling of the problem, a New York Times Poll shows. The survey found some support for joining American economic sanctions against Libya, something that the Governments of all three countries have declined to do. French respondents favored joining in the sanctions, 42 percent to 29 percent; West Germans were evenly divided, at 33 percent, and the British opposed the sanctions by a margin of 41 percent to 38 percent, a gap equal to the margin of sampling error of the British survey. In the West German survey, the margin of sampling error was also three points; in France it was four points. In addition, less than half the respondents in the three countries said the United States was ''overexcited'' about terrorism. And most agreed, as President Reagan has argued, that Libya and the Palestine Liberation Organization had been involved in terrorist attacks.

DONALD C. BURR must have had powerfully mixed feelings when he heard about Texas Air Corporation's seemingly successful $600 million bid for Eastern Air Lines Inc. He certainly felt envy - the acquisition will put Frank Lorenzo, Texas Air's chairman and chief executive and once a close friend and colleague of Mr. Burr's, at the helm of the nation's largest airline. It is a position that Mr. Burr, chairman and founder of beleaguered People Express Airlines, has long coveted for himself. But he probably felt a bit smug, too. Unlike those industry analysts who say Mr. Lorenzo got a bargain in Eastern, Mr. Burr, who once also pursued that airline, is said by close associates to think that Texas Air is paying far too much for an airline fraught with problems. Indeed, for years to come, Mr. Lorenzo is likely to have his hands full wrestling with angry unions and paying off the $3.6 billion in debt that Texas Air is stuck with after acquiring debt-ridden Eastern. ''It is a gutsy and risky deal for Lorenzo,'' said one of Mr. Burr's investment bankers.

If someone had invented the plot, it might seem too incredible: a straight-arrow city official resigns from his post, then changes his mind and requests his job back - but the mayor has already decided to appoint someone else. In a rage, the official - a former policeman and fireman -shoots the mayor and another city official, a prominent homosexual activist. There is no question he committed the murders, but when the case comes to trial the defense claims, among other assertions, that the accused had been binging on junk food with a high sugar content, which may have precipitated violent behavior - a theory soon immortalized as ''the Twinkie defense.'' The jury declines to convict the assassin of first- or second-degree murder, passing only a verdict of voluntary manslaughter - which carries a maximum penalty of seven years in jail. The outraged community riots, with thousands of people storming City Hall and setting fire to police cars. The murderer is paroled after five years in prison, but he has polarized the city and left a legacy of bitterness and anger that will last for years. Long before the wounds fade, the murderer commits suicide in his garage, running a rubber hose into his car to pipe in carbon monoxide and create his own personal gas chamber.

Peter Hall is blocking the first act of the new production of ''Carmen'' at the Met. Cigarette girls enter, and line up in threes to go into the factory - a dozen times. Assistant stage directors dash about, calling for group A (first sopranos) and group B (seconds) to come in sooner, make the line straighter. A few mezzos are told to enter from downstage to improve the picture. All the women move forward languidly to sing the smoking chorus. ''Now!'' Peter Hall calls into the microphone, from the third row of the house. ''Everybody, blow smoke!'' The cigarettes, he has promised, will be herbal. It's all in a day's work for the Metropolitan Opera chorus. Forty-three men and 38 women show up for seven performances a week, 32 weeks a year, plus the tour. They may be asked to create a dreamy, swirling stage picture around Maria Ewing for Carmen's ''Habanera,'' commit mass suicide at the end of ''Khovanshchina,'' or howl for blood in ''Don Carlo.'' No matter what they are doing, they are expected to sing with power, beauty and, especially, precision.

One of the early headquarters buildings of Brooks Brothers - that bastion of tradition - is changing once again. Although not now identified with the clothing retailer, the building was built in 1884 by Brooks Brothers, which occupied it until 1915.

Even the critics who dislike her new movie, ''9 1/2 Weeks,'' agree that Kim Basinger is beautiful. Blonde, with full sensuous lips and a certain subtle luminescence to her skin, she projects an air of sexuality mixed with an almost childlike vulnerability that reminds some viewers of Marilyn Monroe. ''There was something else I always saw in Marilyn Monroe,'' she said recently. ''Terror. She seemed terrified inside.'' So was Miss Basinger, she said, during the shooting of ''9 1/2 Weeks.'' The film is about an art dealer named Elizabeth and her sexual obsession, domination and finally degradation by a man named John, whom she meets by accident. As shot, the film, from the novel of the same name by Elizabeth McNeill, contains some explicit scenes with none-too-subtle overtones of sado-masochism, as the two engage in sexual games that become more and more uncontrolled. Elizabeth finally calls a halt and they separate. The affair lasts 9 1/2 weeks.

LIFE AND FATE By Vasily Grossman. Translated by Robert Chandler. 880 pp. New York: Harper & Row. $22.50. AN important novel written in the Soviet Union will almost certainly prove unpublishable there, but it will usually find its way to the West sooner or later. In the case of Vasily Grossman's ''Life and Fate'' this has happened much later rather than sooner. Grossman's novel was completed in 1960. In other words it was written at about the same time as Boris Pasternak's ''Doctor Zhivago,'' the work with which the practice of smuggling out illicit writings began 30 years ago. ''Life and Fate'' hinges on the closing phase of the Battle of Stalingrad in the bleak winter of 1942-43, when the Soviet Army held and then routed the German invader on the Volga. But the action is by no means confined to that river. It also ranges through Soviet- and German-occupied Eastern Europe, giving detailed vistas of front and rear, depicting mass atrocities and penal procedures on both sides. The text is nearly 900 pages, and the named characters are legion.