ANNAPOLIS -- He may live in a small Baltimore row house and vacation in a trailer, but this summer, he's been entertaining like a Greek shipping tycoon.

Maryland Gov. William Donald Schaefer, along with other top government officials, has been getting a first-class view of the state's watery byways from the saloon and the sundeck of the Maryland Independence, a 112-foot, $636,000 yacht bought by the state last year.

All summer long, the governor, members of his cabinet and legislative leaders have been using the yacht to wine and dine business leaders, congressional and legislative staff members, political appointees and one another. Affairs of state have taken them up and down the Chesapeake Bay, from Hart-Miller Island near Baltimore to Tangier Island in the waters of Virginia.

The yacht, they say, is a business tool.

Last Monday, Schaefer and his new chief of public safety, Bishop Robinson, invited about a dozen of the state's captains of industry out for an evening cruise, to sip drinks, take in a cool bay breeze and watch the sun slip behind the horizon.

After dinner, when they were well offshore, came the quid pro quo: Would they, asked Robinson and the governor, do their part for Maryland by hiring a certain number of convicts released from prison?

The business leaders were receptive, and they agreed to form a task force on the project.

In early June, Schaefer and other top elected leaders took to the bay to inspire good will from New York underwriting analysts doing an annual review of the state's bond rating. Instead of the normal yacht fare of crab cakes and cole slaw, they fed them soft-shell crabs and strawberries, and the bond rating stayed at top-level AAA.

And next winter, when Schaefer is pushing another ambitious agenda through the General Assembly, he may be counting on the memory of a pleasant August cruise to win him a few important hearts, if not minds, in the legislative leadership.

For years, Maryland governors have had state-owned yachts at their disposal, for business or a weekend on the bay, and like Schaefer, have made good political use of them.

The Maryland Independence, the biggest and most expensive such craft to date, was purchased in 1985 during the administration of Gov. Harry Hughes. For a time, Hughes had use of two smaller state yachts, one of which was reserved for his personal use on weekends.

The Independence, with a full-time crew of four, is a luxurious three-level craft. The main level houses the captain's bridge, a dining room that seats 10 or 12 and has accommodated more than 20, a saloon with an oriental rug and working fireplace and the fantail, an open-air lounge. Above is a sundeck and flying bridge, and below are staterooms, the galley and crew quarters.

The yacht costs about $125,000 a year to maintain and operate, according to Jerry Bandelin, who oversees state vessels for the Department of Natural Resources.

Under Schaefer, the boat has undergone extensive renovations that have been paid for out of the state's operating budget. Unused engine room space has been converted into a spacious stateroom and bath for the governor, and two smaller staterooms have been carved out of space nearby at an estimated cost of $40,000 so far. Further renovations to crew quarters and the galley are planned.

Monica Healy, a lobbyist for the state on Capitol Hill, believes a well-placed cruise invitation pays off. In June 1983, political leaders from the states surrounding the Chesapeake took the newly named administrator of the Environmental Protection Agency out on the yacht used by then-Gov. Hughes. It was that trip, Healy recalled, that seemed to impress William S. Ruckelshaus on the need for continued federal funding for cleaning up the bay. "I think that was really a turning point in the bay cleanup program," Healy said.

This summer, Healy has taken House Appropriations Committee staff members out on the Maryland Independence. "It gives us a good opportunity to talk about various programs and where the money is going," Healy said. The yacht trips are part of a strategy "to capture more funds for the bay."

They may be billed as business trips, but at least some fun is involved in almost all cruises, said Harry Porter, captain of the Maryland Independence and other state yachts since 1966.

Still, Porter says, it's not like the old days of the '60s and '70s, before the state became mired in scandals of the Marvin Mandel era. The corruption probes "slowed a lot of people down," Porter said. "There were wild times before that."

While the Independence is available for use by executive agencies, legislators, judges and for good will and public relations efforts -- in short, any kind of state business -- the governor's office has the final say on its use. Few of many requests are granted.

A businessman in Hagerstown, for example, wrote in four times saying he wanted to use the boat, but he was turned down. He is not the only one to interpret "state business" in its broadest possible sense when it comes to using the yacht. Jerome W. Geckle, chairman of a Baltimore firm, the PHH Group, requested use of the yacht because he had "an outstanding opportunity to entertain some top executives of General Electric." He, too, was turned down.

"We get so many requests," Bandelin said. "Everybody in the state wants to use the boat."