The demurely dressed young women could have belonged to any number of oddly clad sects whose members ply the streets of Manhattan daily. Wearing old-fashioned night-gowns your grandmother would have found stylish, the women clustered in groups of three or downtown and midtwon.

But the women belonged to no religious or social sect extolling the virtues of the 19th century. They were part of an advertising campaign launched by Manufacturers Hanover Trust Co. against one of its major rivals, the giant Citibank.

Standing in nightclothes at or near entrances to Citibank branches, the women passed out pamphlets proclaiming, "We caught the Citi napping."

Manufacturers Hanover charged that Citibank -- which advertises that it "never sleeps" because of its 110 consumer-oriented, 24-hour banking centers -- paid only 4.5 percent on passbook savings accounts, while Manufacturers gave customers 5.25 percent the maximum allowed by federal law.

Manufacturers Hanover was taking a brash advertising step in the once genteel world of banking, giving the tiny saver a taste of the bewildering array of options larger investors have confronted for years.

Citibank didn't rest for long. Soon the banking giant was asking its customers, "who is really napping?"

Citibank, it seems, pays 5.25 percent on savings accounts maintained by customers who bank through the 24-hour computerized machines. The bank didn't say so, but it wants to get people out of passbooks and into electronics, so it does pay less on passbook savings accounts.

Furthermore, Citibank said, because it pays interest monthly rather than quarterly, the effective interest rate is higher than Manufacturers Hanover's.

At this point, a banking customer had a reason to be confused. Who was right?

Unfortunately, both banks were. Citibank does pay only 4.5 percent on its passbook. Manufacturers Hanover, which has not made the investment in computerized banking machines that Citibank has, neglected to mention the so-called Citicard savings accounts. It focused on the narrow banking area in which it had a competitive advantage.

If a customer likes the passbook method better, he should go to Manufacturers. If he prefers the impersonal but convenient 24-hour banking machines, he should go to Citibank.

Although one may take issue with what was unsaid in the advertising of both banks and sympathize with the confusion many small saver should realize that they have become the latest pawns in a fight for dollars that more affluent investors have been subjected to for years.

And one can quarrel little with a bank's desire to come up with more funds to lend to its customers.

But one can take issue with many of the more elaborate paper transactions that the wizards of Wall Street and la Salle Street have devised in recent years to capture both investor funds and commissions for themselves.

Some of the investment avenues can be construed to be a subversion of the fundamental role of this nation's or any nation's financial system.

That essence is simple: A financial system moves resources (through the intermediary of financial assets) from those who have more than they need or want to those who do not have enough.

Banks take money from depositors and pay them for their dunds, then lend both funds at a higher rate to businesses, individuals or governments who need money.

Companies and governments can issue debt securities (such as bonds or notes) directly and sell them directly to investors.

Coporations also sell a part ownership in themselves (stock) to get funds and shareholders with such an equity investment, then share in the fortunes or misfortunes of the companies.

Because stockholders may not want to keep their ownership forever and bond holders may need their cash back before the corporation must repay it, a secondary market in these securities grew up.

If you want to sell all or part of your ownership in General Motors, you can do it, although other investors may be willing to pay you more or less than you paid.

Were it not for these secondary markets, investors and companies (and other borrowers) would have a much harder time getting together.

But today's financial system is turning away from its original purpose, creating tertiary and further removed markets that deal in nothing but pieces of paper and keep funds tied up in nonproductive uses. These markets -- such as options trading, Treasury bill futures trading and such other futures trading -- do not channel money to companies or governments that could use them to modernize or grow.

They do, howerver, promise investors big returns (or losses) on their investments and generate big commissions for brokers and other investment advisers.

To their credit, reputable brokers discourage small investors from playing these games, but only because of the potential loss to the investor.

Take options trading. Most major exchanges either trade options or plan to open options floors. When an investor buys an option, he buys the right to purchase a stock at a particular price. But the option is seldom exercised. The contracts are canceled before the closing date.

Options trading is merely a method of betting on what will happen to a particular stock's price. If the investor bets right, he makes a big gain.If he bets wrong, he loses. But the money never gets into the equity arena.

Similarly, commodities trading was once the domain of commodities users such as millers, who sought to protect themselves against the vicissitudes of nature -- a drought or crop failure.

Today, millions of dollars are being poured into futures trading by investors who have no interest in the commodity itself, but are merely betting on whether its price will rise or fall.

Investors are buying massive quantities of the magic metal gold that can neither be eaten nor drunk nor otherwise used except by a small number of industries.

Meanwhile, companies clamor about their need for funds to expand and modernize and find it harder and harder to sell new stock issues. They also find they have to pay more in interest on their debt securities, in part to lure investors away from the lucrative paper-swapping games they play.

The new and increasingly popular financial gains are not the sole reason, or even the primary reason, that many companies are having problems raising needed funds.

Indeed, the popularity of the paper-chase can be laid in large part to the lethargic performance of the stock market in the 1970s and the ravages of inflation.

But until investors are willing to take more risks on industries themselves -- and are encouraged to by their advisers -- the financial system will become and increasingly inefficient means of transferring resources and an increasingly efficient way of playing adult Monopoly, using pieces of paper in place of plastic houses.