For the fourth annual Chesapeake SummerArts festival at St. Mary's College in Southern Maryland, the director wanted to highlight the national controversy over censorship and federal funding of the arts.

With the help of a Baltimore artist, associate professor John Laughton designed a stark playbill cover that featured a photograph of Sen. Jesse Helms (R-N.C.) and a quote by Ronald Reagan.

But festival audiences never saw it. While Laughton was touring China, the president of the small liberal arts college ordered all 5,000 copies shredded. The festival program got a new, plain gray cover, decorated only with the college logo.

And last week, a few days after Laughton returned home, he was summoned to President Edward T. Lewis's office and demoted.

In an interview yesterday, Lewis said the playbill was unrelated to his decision to replace Laughton, who has worked for six years as director of arts and letters, the college's largest division. Lewis said he ordered the program destroyed after faculty members complained.

"They strongly felt it was inappropriate," Lewis said.

But Laughton thinks what happened is the kind of artistic censorship the playbill was meant to point up.

"It is very funny, very ironic and very twisted," Laughton said. "When I saw the extent of repression on a daily basis in China, and then see it is starting to affect lives in small communities like St. Mary's, that is startling. I'm disgusted."

Said Sherwin Mark, the artist who proposed and executed the design: "This is the worst part of the whole issue with the NEA {National Endowment for the Arts} . . . . There is self-censorship."

The college's festival is a summerlong series of plays, poetry, concerts and art shows that attract large community audiences. Past program covers have depicted a bird in a marsh and children's drawings -- "pretty innocent stuff," said Mark, who has designed them all. But this year, Laughton said, "the concern about the arts community is so great, to put ducks and pretty pictures on the brochure would be a travesty."

Mark's red, white and black design featured Helms and this Reagan quote: "Where there's liberty, art succeeds. In societies that are not free, art dies."

"It was merely done for the purpose of bringing to the attention of thousands of people who will attend this festival that . . . in this country, there is a struggle going on, and they should think about it," Laughton said.

But Larry Vote, an associate professor of music, said when the fliers were mailed, "there were a lot of people that were disturbed by it. They felt, if there was going to be something this provocative, there ought to have been some discussion about it down the line."

Said Herbert Winnik , a historian who is president of the faculty senate, "If I were president of the college, I could understand the concern . . . . " But he added, "Would I have shredded it? I don't think I would have done that."

Lewis said he did not think his actions were a form of censorship. He said the public, 1,500-student college has sponsored controversial art shows and produced plays that have drawn community criticism. "We don't censor faculty in arts and letters or any other area."

And he and faculty members said Laughton's demotion was impending before the program was designed. Lewis would not discuss the reasons, saying "it would be unconscionable for me to give any details" of a confidential personnel matter.

Laughton contended that he had not received a negative job evaluation or other criticism of his work.

Now, Laughton is negotiating a new contract, under which he would still teach at St. Mary's but would receive a $4,000 cut in his $61,000 annual salary.

He said it is not the pay cut, or even the demotion, that bothers him most. "I guess I live with the idea that ideally the academy is a place for discussion. When an idea is current, this is an important place."