July 25, 1986

Nineteen people and a company were indicted today on charges of giving or receiving bribes in exchange for military contracts. Those indicted included employees of some of the nation's best-known military contractors, but the contractors themselves were not accused. The kickbacks, which ranged from less than $2,000 to as much as $70,000 for one person, did not relate to the award of prime contracts by the Defense Department. Rather, they purportedly occurred a step later, as the prime contractor purchased supplies or awarded subcontracts.

The Economy The Administration now predicts more economic growth in 1987 than it forecast in February, and it acknowledges that growth this year will be less than it foresaw, according to confidential budget documents. The new estimate sees the economy growing 4.5 percent from the fourth quarter of 1986 to the fourth quarter of 1987 - a half-point higher than the February estimate. Economists said the estimates were optimistic. [ Page A1. ] Conferees are close to resolving the issue of taxing middle-income people, after getting new data on how the Senate and House bills would affect those earning $20,000 to $50,000 a year. [ D1. ]

At a beauty pageant in North Carolina, where she was raised, Tina Renee DelConte's pure white evening gown would have been run-of-the-mill, with its fishtail skirt and a ruffled bodice sewn with bugle beads. But in New York, where she is the reigning Miss Big Apple, Miss DelConte was stunned to find herself ''the only one wearing white'' at last year's pageant. ''Those girls wore red dresses, black dresses, green, orange -purple, even!'' Miss DelConte said, her voice swooping with surprise that such a thing could be possible. ''And the bathing suits! French-cut legs! No backs! Low necklines! Down home, ours would be straight across the legs, old fashioned even, like a tank suit.''

The Interstate Commerce Commission, breaking with a 20-year history of approving major railroad mergers, today rejected by a vote of 4 to 1 the proposed merger of the Southern Pacific Railroad into the Santa Fe Railway. The commissioners, all appointees of President Reagan and ardent supporters of his posture that the Government should interfere less with the affairs of business, held in their surprise vote that the merger could reduce competition in some parts of the West and Southwest. Because of this, they found, the adverse effects of the merger outweighed its benefits to the public. The Santa Fe Southern Pacific Corporation, the holding company that runs the Santa Fe directly and the Southern Pacific through a separate trust, now has two years to divest the Southern Pacific Railroad or propose an alternative plan for responding to today's order. The commission had been considering the merger since it was proposed in December 1983.

The last open door to Western Europe, West Berlin, has in recent weeks been swamped by a flow of people from the third world seeking asylum. And this has put new strains on the fragile fabric of East-West understandings underpinning this city's peculiar status. Arriving lately at 300 a week, the refugees, camped in requisitioned schools and huge tents erected on community sports grounds, have also become a hot political issue with the approach of national elections in January. In Bonn, Interior Minister Friedrich Zimmermann warned today that the number of refugees had jumped by 109 percent from 1984 to 1985, a year when more than 74,000 applied for asylum. A total of 42,000 were registered in the first half of this year. He said some asylum-seekers would turn to terrorism and crime.

WHAT was once the mercantile center of the city has, after nearly a century of languishing, flowered again as an attractive neighborhood, a new scene on the eternally changing stage of New York. These are the blocks between Fifth Avenue and Irving Place, from Union Square to 23d Street. While its segments fall into such zones as Gramercy Park, Union Square and Ladies Mile, its own distinctive features have not yet earned it a name. Such names are important tags in New York because they provide instant, if stereotyped, ID's for the life style and interests they cover - for example, Greenwich Village or Chelsea. At the north end of this nine-block stretch, a sign on a new residential building proclaims that it is in the ''Flatiron District,'' named for the historic triangular skyscraper at Broadway and 23d Street. At the south end, store and restaurant names run to ''Union Square'' designations. No matter, because it is all one piece, featuring some of the newest decor in the most elderly of premises.

A caption on the Washington Talk page on July 2 about the signing of the Declaration of Independence incorrectly described the illustration. (A detail from the illustration also appeared in the News Quiz on July 5.) It was a Currier & Ives engraving of a painting by John Trumbull.

The State Supreme Court lifted a restraining order today that had barred the removal of 5,000 drums of soil contaminated with radon from the lawns of five Montclair houses. The court authorized shipping the soil to Vernon. The decision, by five of the seven justices, upholds a ruling issued Monday by an Appellate Division judge. That order authorizes removing the barrels to temporary storage on a state-owned road that leads to Wawayanda State Park. The road is adjacent to a sand and gravel quarry owned by Baldwin Enterprises.

''We will have to review the Executive Order that expires in September and the decision would be made as to whether we want to add sanctions to that Executive Order.'' - Larry Speakes, referring to South Africa.

International Limited sanctions against Pretoria may be imposed, the White House indicated. Since President Reagan's speech on Tuesday strongly opposing sanctions, the Administration has come under a storm of bipartisan criticism. The intensity of it has surprised ranking White House officials. [ Page A1, Column 1. ] Britain's rejection of sanctions against South Africa prompted 31 of 58 countries to withhold their athletes from the Commonwealth Games that opened last night in Edinburgh. Politics was the dominant event as Prince Philip welcomed 1,600 athletes in the name of global fellowship. [ A2:5-6. ]

The number of emotionally disturbed patients being treated and involuntarily admitted at New York's municipal hospitals has increased sharply since a just-released mental patient was charged with killing two people aboard a Staten Island ferryboat, city officials said yesterday. Psychiatric units in municipal hospitals have become so overcrowded since the July 7 attack, the officials said, that patients are being transferred in buses to state psychiatric hospitals outside the city. Dr. Luis Marcos, head of mental health services for the city's Health and Hospitals Corporation, attributed the increase to ''caution'' and ''defensiveness'' being exercised by psychiatrists following what the city and the state said was the ''premature'' and ''medically inappropriate'' release of the suspect, Juan J. Gonzalez, from the psychiatric emergency room of Presbyterian Hospital on July 5. #2 Days in Emergency Room Mr. Gonzalez, 43 years old, had been kept in the psychiatric emergency room at Presbyterian for two days before his release after the hospital had failed to have him admitted to another hospital. Presbyterian Hospital officials contend that the hospital's treatment of Mr. Gonzalez was appropriate.

IT is New Year's Eve in 1929 when we meet Lily Walker, the character portrayed by Helen Schneider in her one-woman show, ''A Flapper's Folly.'' A nightclub singer in her late 20's, Lily is still smarting from an unhappy love affair with a glamorous but faithless New York bootlegger named Frankie. Nostalgic and a little tipsy, Lily begins to reminisce. In a 90-minute theatrical collage of brief monologues and one-sided conversations, strung together with pop and blues songs, all from the 20's, Lily tells the story of the ill-fated relationship. The show's 17 songs are sequenced in such a way that they advance the story. Some of the standards Miss Schneider performs include ''Lover, Come Back to Me,'' ''If I Had You,'' ''Love Me or Leave Me,'' ''Sugar in My Bowl'' and ''If Love Were All.'' A superb blues singer, as well as a fine actress, Miss Schneider melts so completely into the character of Lily that ''A Flapper's Folly,'' which recently reopened at the Ballroom, is much more than a smart cabaret concept. It succeeds as a fascinating and touchingly personal re-creation of a bygone era telescoped through the sensibility of a complex, clearly imagined character.