As the publishing industry faces the hardest times in recent memory, writers are on the verge of founding a national union.

The issue arose in the pandemonium of the American Writers Congress in New York last fall, solidified during the winter, and took shape over the Memorial Day weekend when 25 writers representing 10 cities convened in Princeton, N.J., to create a national organizing committee and set agenda. And now committee officials say that next March they will form a union--"no matter how many have signed up," says John Dinges, chairman of the Washington group, part-time editor at The Washington Post and co-author of "Assassination on Embassy Row."

Nationally, the issue has rankled the literary establishment. Most publishers find the idea unrealistic, especially now, when houses are cutting back dramatically on advances, limiting their lists and trying to defer payments as long as possible in response to high interest rates.

Locally it became a major topic in yesterday's hotly contested election for president of the 1,400-member Washington Independent Writers. Incumbent Dan Moldea, author of "The Hoffa Wars" and a member of the D.C. union organizing committee, lost to challenger Dan Rapoport, a magazine writer. Moldea said he was "smeared" by charges of radicalism because of his union ties. He had wanted the union to become an autonomous "third branch" of WIW, along with the existing trade association and legal/educational fund. Rapoport had criticized Moldea for "pushing" a union-WIW connection. "I'm really intrigued by the idea," he says, "but I think we ought to slow down and let the dust settle first."

The cloud has been flying since the writers' congress--"quite a mandate," according to Washingtonian Barbara Raskin, who heads the national organizing committee. But aside from protesting censorship and government restrictions on information, she says, union organizers have since dissociated themselves from the political melee in New York, concentrating on professional issues, accumulating some 750 dues-paying members and forming a plan of action.

For book writers, the group advocates: a scale of minimum advances for various kinds of books (with exceptions for first novels and "chancy" genres such as poetry); 20 percent royalty rates (currently ranging from 7 1/2 to 15 percent, depending on volume of sales and other factors); mandatory insurance for libel and related offenses (except plagiarism); full itemized accounting of sales, print runs and returns; full participation by the author in marketing and promotion efforts and advertising copy; protection against "over-extensive" editing changes in substance, content and style; and new policies for remaindering--the process by which a publishing house unloads its leftover books on a wholesaler. "As it is now," says Dinges, "to maximize profits, a publisher begins to remainder your book at the point of declining returns." But because of royalty escalators in most contracts, "that happens to be the point of increasing returns for the author."

In addition, the organization hopes to institute a standard contract for the industry similar to the existing model created by the Authors Guild, a national organization which offers practical advice to writers. The union contract would, among other innovations, eliminate the traditional option clause (stipulating that a publisher has the first option on a writer's next book or books) and provide for an author's retaining his advance if his editor leaves a house. To take collective action against a publisher, Raskin says, writers would refuse to finish books under contract, other authors would avoid the house, and readers might be called upon to boycott.

"That's a real bag of snakes," says Robie Macauley, senior editor of Houghton Mifflin. For one thing, "you don't remainder a book until it's completely dead," and the royalty hike would be "suicidal," since "everybody would start turning down everything, and even more marginal books would go unpublished." But he agrees with the accounting disclosures: "Publishers never tell authors anything."

Roger Straus, president of Farrar, Straus & Giroux, says the union "makes great sense" although "I'm not sure that publishers would benefit." He agrees with most of the agenda except for some "rather ridiculous" points such as the promotion section. But "in any 'revolution,' you always ask for more than you're going to get." He feels some publishers abuse novice writers with exploitative contracts, and deplores the tendency of paperback houses to defer payments as long as possible. Sixty days, he says, should be the limit.

Alphons Hackl, head of Acropolis Books here, says he welcomes author participation, but finds the union plan unrealistic for small presses, where it would "make it very difficult for a new writer to enter the field. Authors ought to be more aware of the enormous economic risk in launching a book." Already, many agents are concentrating on potential blockbusters and "gimmick" books at the expense of deserving but uncertain titles. One veteran agent says, "I simply can't afford to take a marginal novel anymore."

For magazine writers, the union committee advocates first a general rise in rates. At 10 cents a word, magazine writers are "grossly underpaid," Raskin says. "They get less than they got 100 years ago." The union group proposes a sliding scale of minimum payments "based on the profit structure of the magazine and its ability to pay"--perhaps in the neighborhood of $3,500 for a large-circulation magazine. "If it costs you more to live than you're getting paid," Dinges says, "then you're giving gifts. And that subsidy from the writer to the magazine has got to stop."

Under the union group's plan, magazines would have to accept or reject an article within 10 days of receipt. If accepted, the kill fee (customarily about one fourth of the total--the committee wants one third) would be paid as an advance, and the magazine would be entitled to one rewrite. More would cost extra. Writers would have some control over illustrations, photos and headlines used with their articles, and would have the right to remove their names if faced with "unacceptable" editorial changes.

The union plan would establish an arbitration mechanism to assure that articles would be killed only "on the basis of quality rather than capricious or frivolous things, like they got scooped or something," says Raskin, who worked hard on an article about the Iranian embassy here. "Then the hostages got taken," she says, "and I only got one third." And the group advocates "folding insurance" to pay writers if a magazine goes out of business.

John Limpert, editor of Washingtonian magazine (20 percent freelance material at about 20 cents a word) says "it's good for writers to get together--it's a lonely business," but finds many of the union plans unworkable with magazine markets drying up and editorial budgets fixed. He doesn't believe anyone should try to make a living as a free-lance magazine writer; and as for advances, "I've paid them--and then gotten post cards from New Mexico." Flexibility in payments, he says, preserves "the positive side of free-lancing--the opportunity to audition new, untried people. Writers ought to be treated very unequally--because they're very unequal in talent."

The union will face a number of problems beyond the scope of its demands. First, it is uncertain whether, under antitrust law, it is legal for writers to combine to set prices; and according to federal labor regulations, only employes of a single employer can be certified for collective bargaining. The 8,500-member screenwriters' guild engages in such activities, but the parallel is unclear. Moldea has worked with independent truckers who faced the same legal questions before the National Labor Relations Board, and has urged their example on the union group's legal adviser, labor lawyer Lewis Steel. "It's a strategic thing at this point," says Dinges. "We don't have a unanimous body of legal advice," and the union will have to test the concepts in court.

Also sensitive, and still undecided, is the question of membership standards. Raskin says the union is intended only for those who "make a significant part of their living from writing," or poets and small-press authors who dedicate their lives to it. As a result, Dinges says, "some people who have already signed up may be kicked out, although there will most likely be a tier system."

Whatever the criteria, Dinges says, "we need lots of big names who have clout at their publishers'." Once the union is formed, Raskin believes, "these people will enlist--they get screwed on a lot larger level than we do." Authors as diverse as Robert Ludlum, Kurt Vonnegut and Helen Yglesias have expressed interest. But novelist Toni Morrison, who last fall called for "a heroic writers' movement" that is "militant and pugnacious," now feels that the union will have to stress cooperation to gain wide acceptance. "There are no villains," says Morrison, also an editor at Random House, "everybody's hurting." With several publishing houses up for sale, Brentano's facing bankruptcy and a public reluctant to read, Morrison says that if the union is "hostile toward publishers, I can't support it. We have to work together to get what all of us want--more and better books."