In the early 1970s, Sam Owen said, the main problem in Greensville County schools was that too many children were getting through them without learning much reading, writing or mathematics.

As superintendent, he had a blunt answer: Don't promote students until they master the work for each grade and "stop handing out rubber diplomas."

For seven years, despite controversy and some compromises, Owen's small, rural school system in southside Virginia stuck pretty much to those precepts, sometimes holding back a third of its 3,300 students while attracting national attention as its average test scores rose sharply.

Now the policies that curbed easy promotions are being dismantled. Amid a swirl of criticism, Owen, 59, has resigned.

The complaints go to the heart of Owen's program for, as promotion by achievement replaced promotions based largely on age, the number of high school graduates declined. The number of "over-age" students increased greatly, drawing protests not only from the parents of those left behind but also from parents who did not like having older children, with their "bad influences," around the younger children.

There also were charges that the program discriminated against blacks because more of them failed than whites.

"It's a classic situation," said Diane Ravitch, an associate professor at Columbia University Teachers College. "When you make a change, you have to know there are costs. Maybe the standards hurt too much, and they the parents just aren't willing to bear it. But there are costs the other way, too. Will they have nonreaders graduate from high school?"

In 1973, the significance of Greensville's new promotion policy went well beyond the county's borders. It was one of the first and most dramatic responses to concerns about sliding achievement, and complaints that schools had become conveyor belts on which promotion and graduation were automatic.

For school districts across the country that since have toughened promotion policies, the problems encountered in this county of peanut farms and plywood factories may have wide implications.

In the District of Columbia, for example, elementary students now are required to master a checklist of skills before they can be promoted. The school board announced last week that 27 percent had been left back last semester, the first time the policy was applied up to sixth grade, including 44 percent of fifth graders.

"Everybody wants to get rid of social promotions," said associate D.C. school superintendent James T. Guines. "But it just is not that easy. . . . The standardized tests they used in Greensville were a problem, and we're using our own mastery checklists here. But I think they made some progress. They were getting results. The problems could have been worked through with some tolerance in the community and on the board. But that doesn't always happen."

Under the plan instituted by Owen, each student took a battery of nationally standardized achievement tests every fall and spring. Teachers had to follow elaborate checklists of skills and certify that almost all objectives had been mastered. The teachers also gave grades in most subjects.

At the end of the year, grades, test scores and checklists were supposed to be used together to decide on promotions. If there was a discrepancy--when test scores were below grade-level, for example, but grades were passing--teachers had to explain in writing why a student should be promoted and principals had to give their approval.

Children who failed were assigned to different teachers who tried to present work a new way, according to Owen. There also were reading and math labs, summer school and half-step promotion classes (such as 1-2 or 5-6) for those who had mastered a substantial part of a year's work, but not enough for full promotion.

To take care of students who failed repeatedly and reached age 14 when they were still below the seventh grade, the Greensville County schools set up a vocational training program. It offered a certificate of "occupational proficiency" instead of a high school diploma. But the program was attacked as a low-status dead end, and, after complaints from the local NAACP, its rules were changed last year to cut enrollment and make it easier to transfer to regular high school courses, even for those who had not passed lower grades.

"It's just been an elephants' graveyard for all the over-age kids who couldn't make it," said Alfred Roberts, a radio announcer who was appointed to the school board in July. "They'd fail a kid until he's old enough age 14 , and then he'd just disappear in OPT occupational proficiency training ."

The NAACP also charged that the standardized achievement tests, which played a key role in promotions, discriminated against blacks.

In early 1980 the federal Office for Civil Rights, then part of the Department of Health, Education and Welfare, upheld the tests, provided there were clear guidelines on how to use them. But last June, after three new members were appointed, the school board agreed to drop the examinations as part of an out-of-court settlement of a lawsuit that the NAACP brought when it was dissatisfied with the federal government's findings.

The settlement, which satisfied virtually all NAACP demands, also ended half-step promotions and required the board to make "every effort" to have a racial balance in each classroom of between 40 and 85 percent black. Total enrollment in the school system is 66 percent black.

Despite Owen's misgivings, the agreement was approved unanimously by the board, which had a 4-2 white majority. Garland Stith, a black member who strongly supported the tough promotion policy, said he thought the board should not have settled the case and should have fought for the program in court. But Stith said that the other members wanted the settlement, "to get some peace and save some money" in legal fees, and so he went along.

"Sometimes it's worth more to keep harmony than to get your own way," Stith said recently, "particularly in a small town."

After two more new members came on the board in July and all but one of his longtime supporters had left, Owen and the board clashed repeatedly. On Dec. 31 he resigned. He has spent the time since having an operation, sorting papers and looking for a new job.

"The school board does what the school board wants to do," Owen explained. "I just felt it would be very difficult to hold the standards up to where we wanted them to be. I didn't want to stay there and watch the things I worked for go away."

The key charge in the NAACP lawsuit was that under Greensville's strict promotion policy, blacks did proportionately worse than whites and that this constituted illegal discrimination. Indeed, in 1980, when total enrollment was 65 percent black, blacks accounted for 76 percent of the students held back, 85 percent of those in half-step remedial classes (including five classes that were all-black), and 84 percent of those getting occupational proficiency certificates. By contrast, 58 percent of the students getting regular high school diplomas were black.

"We felt it was all pretty much a cover to continue discrimination," said Norman Chachkin, an attorney for the Lawyers' Committee for Civil Rights Under Law, who handled the case.

"I think they were just interested in the white children, and it just wasn't fair," said Geraldine Macklin, a pharmacist's wife who spearheaded local black opposition to the promotion policy. "It's pitiful. Most of the black children are a year behind in school, and it's not because they couldn't do the work. It's because they can't pass the test. . . . If children can get what a teacher teaches them, that's the best they can do and they should be promoted."

Owen, a folksy, slow-speaking man who was raised on a peanut farm near Emporia, strongly rejects the charge that the promotion standards were discriminatory.

"Look, if I didn't like somebody, I think I would want to get them on through as quickly as possible," he said. "I took a lot of heat from white parents about 'over-age' black children in the classrooms."

"If I go to a doctor, I want to know he earned his degree. Blacks feel the same way," Owen continued. "Down here, a whole lot of blacks start out behind the whites. But I feel they can be brought to grade level."

"It's not just Greensville County where blacks have problems in school," said board member Stith. "It's the whole United States. For those who've been deprived so long, I don't think you could expect it all to be equal. But I'm proud of the progress we're making now, and I don't think our children should just be passed on through school without learning."

In Greensville County, the gap between blacks and whites extends far beyond school promotion rates. Many of the blacks live in small run-down homes, often with wells and outhouses. The whites seem modestly prosperous, though few are well-to-do.

The county itself has a population of 10,903, about 57 percent black, and in 1979 had the state's lowest per capita income. The city of Emporia, about 65 miles south of Richmond, also is in the school district. Its population of 4,480 is 60 percent white, with per capita income slightly above the state average.

In the Greensville schools this year about two-thirds of the students, most of them black, are poor enough to qualify for free lunch.

When the strict promotion policy started in 1973-74, so many students failed--more than 1,300--that it brought many blacks and whites together against Owen.

Keith Mitchell, editor of the Emporia Independent-Messenger, recalls a heated meeting in a school cafeteria with "white red-necks and black militants both mad at Owen because their kids had failed." The whites called Owen a communist and the blacks called him a bigot, Mitchell said.

"I never thought anything would bring them together," he continued. "But there they were."

After the wave of protest, Owen said that, for one year only, he would let students who had passing marks but low test scores move to the next grade if their parents insisted. About 500 took him up on the offer.

The next year there were no exceptions. But the number of students held back in the same grade declined, to 617 in 1975 and 436 by 1978. Half-step promotions dropped from 531 in 1975 to 312 in 1978.

Meanwhile, average achievement, as measured by standardized tests, rose substantially: from about the bottom quarter of all pupils nationwide to around the national norms, or slightly below them.

These results attracted wide attention, and for several years the program seemed to draw a fair measure of local pride and acceptance from both whites and blacks, editor Mitchell said.

But as more time went by, the dissatisfactions grew. The number of high school graduates fell substantially, from 248 in 1973 to 147 in 1979, although the number of students dropped only slightly. Last year only 114 students got regular high school diplomas, while another 46 received vocational certificates.

After climbing for several years, test scores leveled off. Last year they declined signficantly, although the averages still were much higher than before strict promotions began.

Also, from 1978 to 1980 there was almost no drop in the number of failures and half-step promotions. The numbers of older children in every grade increased. According to the new school board's report, about 20 percent of all Greensville students now are two or more years behind their usual grade, with substantial groups of 14- and 15-year-olds in classes that normally have children aged 10 or 11.

"These over-age children were just piling up like crazy and causing terrible discipline problems," said D. Scott Fisher, an insurance agent who is president of the elementary schools' PTA. "They're just being left back and not getting anywhere. It's an exercise in frustration."

"I think it's worse to put children ahead where they can't do the work," Owen said, "rather than keep them at a level where they're making some progress." He said that his critics exaggerate the discipline problems.

The presence of older children with low achievement levels in elementary and junior high grades drew the strongest complaints from the parents of younger children. The criticism was spearheaded by the Junior Women's Club, a group of younger, middle-class whites under age 35, and then amplified by the PTA.

School board members, both old and new, think that these complaints played a key role in changing the composition of the board and getting it to agree to the NAACP settlement.

"A lot of blacks had been attacking this for years, and we weren't getting anywhere," said Roberts, who joined the board just after the settlement. "When these younger whites got concerned, things changed."

The current members of the school board say they oppose social promotions. However, with half-step classes dropped, the number of full promotions increased sharply last fall. New tests based on the skill checklists, which Owen said should replace the national examinations, have not been developed. Last week the board committee on over-age children recommended that checklists no longer be kept for individual students because of the heavy paperwork involved. It said that teachers should "look very seriously at the situation" before holding a child back more than one time.

"You have to have confidence in your teachers," said W. Allan Sharrett, a 29-year-old white attorney on the school board who has been a strong critic of Owen. "We just can't keep failing so many kids. It's an unbelievable problem."

His statement illustrates the central dilemma in tightening standards, according to Ravitch of Columbia Teachers College. "Some people on school boards want the best of all possible worlds," she said. "They'd like to have promotion standards, and have no one fail. But you can't have it all. You have to make choices."