PETER ROSS RANGE is a staff writer for The Magazine

IT'S 5 in the morning and David Stockman is holed up in the basement study of his regulation Colonial-style home in suburban Potomac. The erstwhile whiz kid of Reaganomics is spending at least 12 hours a day churning out his version of life inside the Reagan administration -- in longhand. He is shielded from public life and prying reporters' calls so he can get on with the chore at hand: Harper & Row is paying him $2 million to finish his memoirs by the end of next month.

Stockman's contract is twice as large as those signed in the past year by three other political luminaries, Geraldine Ferraro, Jeane Kirkpatrick and Tip O'Neill. It is in the same elite league with the amounts paid Richard Nixon and Henry Kissinger, who each received a reported $2 million for their books. How a mere ex-director of the Office of Management and the Budget came to be in such lucrative company is a study in the politics of publishing, and vice versa.

The making of David Stockman's contract began last spring when his assistant, Diana Moore, telephoned Harriet Rubin, a book editor at Harper & Row. For several years Rubin had been sending Stockman letters suggesting he write his political memoirs. But Rubin's correspondence had a decidedly one- way flavor: "He simply never wrote back," she says.

Now Stockman was putting out feelers to the publishing community; Rubin was invited to Washington for a meeting. When she returned to New York, she delivered a glowing report on Stockman's book plans. "Dave was at the center of everything," she told Harper & Row president Brooks Thomas. "He is the one person who can make sense of the last four years."

Stockman had other publishing contacts as well. Harold Evans, former editor of The Times of London and now editor in chief of The Atlantic Monthly Press, had told Stockman before the 1984 elections that he wanted to be his editor when the time arrived. Evans was at the White House eight months later, on July 9, when Stockman announced his plans to resign by the end of the month. Evans dropped by Stockman's ornate chambers in the Old Executive Office Building; he held out the possibility of a triple whammy: he would publish the book while serial rights would go to the other parts of the empire owned by real estate mogul Mortimer Zuckerman: U.S. News & World Report and The Atlantic. It was in a sensational 1981 interview with journalist William Greider in The Atlantic that Stockman had let down his hair about fundamental failings of the Reagan economic program.

"He was very intrigued by the idea of being republished and serialized in The Atlantic," says Evans.

Yet Stockman was exploring other options as well. He sought counsel from Erwin Glikes, president and publisher of The FreePress, a subsidiary of Macmillan. Glikes has published works by of such neoconservatives as Norman Podhoretz, Jeane Kirkpatrick and Irving Kristol. "I flew down and spent an hour in his office," says Glikes. "It was quite a scene -- this young sandy-haired guy in a corner beside a computer in this turn-of-the- century office. He said he'd never done this sort of thing before. I gave him a a lot of advice, which he ignored. I told him to get a good agent, which he didn't."

"I think he decided early on not to use an agent," says Lynn Nesbit of New York's International Creative Management. Nesbitt tried without success to enlist Stockman as a client. "Stockman is sui generis. He's that peculiar public figure who can go out and command that kind of money."

Two days after Stockman announced his intended resignation, The New York Times cited "friends and colleagues" of Stockman who estimated that bidding on his book "will reach at leas $1 million." The Times is daily fodder to the New York-based publishing industry, and at least one Manhattan editor thinks this amounted to a carefully orchestrated trial balloon. "Stockman's no dummy," said the editor. "He knew that story would establish a floor," that is a minimum acceptable bid.

"He has a strong pecuniary sense," says Peter Osnos, associate publisher of Random House, which also bid on Stockman's book. "It's one of his political gifts that he makes people feel as if they have a special relationship with him, an inside track."

BY LATE JULY, the publishing world was beating a path to Stockman's office overlooking Pennsylvania Avenue. More than a dozen houses expressed interest in bidding on the book, but only a handful were invited for "an audience with Stockman," as one editor put it. Simon and Schuster chairman Richard Snyder accompanied editor Alice Mayhew. Macmillan president Jeremiah Kaplan and Erwin Glikes came to bid in conjunction with Warner Books, which would have published the paperback edition. Jason Epstein, editorial director of Random House, paid a call. Bantam Books chairman Louis Wolfe and editorial director Stephen Rubin came to hear Stockman's presentation. Harold Evans, who was Henry Kissinger's editor on his memoirs, suggested the former secretary of state might put in a good word for The Atlantic Monthly Press; Kissinger picked up the phone on the spot.

Meanwhile, Harriet Rubin returned for a second visit with Thomas and Harper & Row publisher Edward L. Burlingame in tow. Thomas struggled up the long steps of the Old Executive Office Building in a hip cast, the result of rock-climbing accident. "Brooks thought this would be a good selling point," laughs Rubin. "He figured he would be the only chief executive officer to come all the way to Washington in a cast and that would show we were serious."

"He was on crutches and wearing only one shoe," remembers Stockman's assistant, Diana Moore. "It seemed kind of heroic."

Stockman's style was unique for a man with no record as a book author. Rather than offer a written outline of his prospective book, he dazzled his listeners with an extemporaneous presentation that ranged over his life, his political philosophy and details of White House policy making.

While Glikes insists that Stockman "was not telling tales out of school," another editor -- who asked not to be named -- remembers Stockman's outline differently: "There will be revelations that will embarrass people. The man has a sense of mission that overrides any sense of delicacy."

Stockman's oral presentation loosened the publishers' purses. "It was an American odyssey . . . so well woven together that we made a big bid," said Macmillan's Kap- lan.

"He made it seem as if he had been writing books all his life," said Harriet Rubin. "When we walked out of there, we just sort of looked at each other and said, 'Wow!'

BY THE FIRST WEEK of August, the bids were in and Harper & Row was winning. The tip-off came when Stockman called Evans to report an offer in the $2 million neighborhood. "The market's gone crazy," he told Evans. Was The Atlantic Monthly Press still in?

"We were prepared to go more than $1 million," says Evans. "But Mort Zuckerman decided not to get into the $2 million bracket."

On Aug. 1, one week sooner than expected, Stockman telephoned Harriet Rubin to accept. Now time will tell if the price was as wise as it was large: there are those in the book business convinced that Harper & Row has vastly overbid the sales potential of the book. "There's one chance in 10 that they will get their money back," said a New York editor who requested anonymity. "They did it because it makes the house seem rich and famous."

"Sour grapes," replied Brooks Thomas.

"We did our homework. I could lay it off today to the same people for the same price."

In early November, Newsweek offered more than $250,000 for first North American serial rights. The Sunday Times of London and a British book publisher had committed over $100,000 for British rights.

Bertelsmann publishers and Der Spiegel news magazine had bought German rights for a record sum ("in the six figures," said Harriet Rubin).

Japanese rights, potentially the biggest sale of all, were still being negotiated.

MEANWHILE, out in the suburbs, the author of all this excitement is working a farm boy's hours in the home study.

Diana Moore takes his jottings to the typist every night and Harriet Rubin fetches finished copy every two weeks. The book is due out in late spring.

But Stockman's slavery to his yellow pads will soon end.

After five months of writing at about $100,000 a week, he must report in January for his new duties as a managing director of Salomon Brothers, the New York investment house. He won't be making as much there: only about $20,000 a week.