IN THE same month that the O.J. Simpson jury was acquitting, a million men were marching and Colin Powell's family was pondering, another group of African-American citizens was making its mark on America's collective racial consciousness. Prisoners in at least four federal correctional institutions rioted in the last week of October, apparently unhappy over Congress's decision to maintain extraordinarily punitive prison sentences for crack cocaine offenses.

In a season of healthy, if difficult, soul-searching about race, the prison riots were a reminder that what is ultimately at stake in America's racial debate is civic peace -- that there is a direct connection between law and order. It was also a reminder of how few Americans know where crack came from and why it is punished so severely.

Whether the 100-1 disparity between crack and powder cocaine sentences as established by the 1986 Narcotics Penalties and Enforcement Act, is "wrong," "unfair," "racist" and "ungodly," as Jesse Jackson declared in his speech at the Million Man March, is the subject of debate.

What is indisputable is the effect of the 1986 law. Imagine two drug dealers, one a supplier and one a street dealer. The supplier sells the street dealer three grams of cocaine. The street dealer mixes the drug with baking soda, cooks it in his microwave oven, producing six grams of crystalline smokeable crack cocaine. If he gets arrested and sent to federal court, he faces a mandatory minimum of five years in jail. The supplier has to get caught with 500 grams of powder cocaine -- about 1.7 pounds -- to face that much time in federal prison.

One curious effect of "get tough" laws is to punish cocaine retailers while extending relative leniency to cocaine wholesalers.

From that preference, flows the racial disparity. Powder cocaine offenders in federal prison are predominantly white (32 percent) or Latin (39 percent). But 94 percent of the 3,430-plus crack defendants in federal court last year were black. The Los Angeles Times reported that no white person has ever been convicted of a crack offense in the federal courts of Boston, Denver, Chicago, Los Angeles, Dallas or Miami or Dallas. (Federal prisons hold 60,000 drug offenders, about a fifth of all drug offenders incarcerated nationwide; 14 states have laws that treat crack and powder co caine offenders differently, according to the U.S. Sentencing Commission.)

Defenders of the disparity, such as Rep. Bill McCollum (R-Fla.), argue that "crack is more addictive than powder cocaine, accounts for more emergency room visits; it is most popular among juveniles; it has a greater likelihood of being associated with violence; and crack dealers have more extensive criminal records than other drug dealers."

The U.S. Sentencing Commission, a seven-member panel which monitors the federal prison system and makes recommendations to Congress, examined the issue last spring and concluded that "the media and public fears of a direct relationship between crack and other crimes do not seem confirmed by empirical data." In April the commission voted 4-3 to eliminate the disparity between sentences for offenses involving less than 500 grams of crack or powder cocaine.

With the commission's recommendations scheduled to become law on Nov. 1, the Congress objected and voted to sustain the disparity. Within 24 hours of the House vote on Oct. 20, prisoners at the Federal Correctional Facility in Talledega, Ala., torched a craft shop and went on a baseball-bat wielding rampage that injured 13 people. "I know they {the prisoners} were watching it {the House vote} on C-Span," Juanita Hodges, leader of an Atlanta-based prisoner rights group, told the New York Times.

The next morning, 150 prisoners in Allenwood, Pa., rioted in the prison dining hall. At noon that same day, prisoners in Memphis refused to return to their cells then began setting fires in trash cans and breaking windows. Bureau of Prison officials in Washington declared a lockdown at all 80 federal prisons. When guards as Greenville Correctional Institution in southern Illinois tried to enforce it, more violence erupted, requiring calling in a SWAT team to restore order.

The now-familiar difference in white and black perceptions of reality emerged immediately. Inmate family members and advocacy groups (most of them black) insisted that crack sentences were a central cause of the unrest. Prison officials, Republican congressional aides and Clinton administration officials (most of them white) tended to emphasize the role of other factors, such as overcrowding and Congress's decision to remove weight-lifting equipment from prisons.

But no one disputed Deputy Attorney General Jamie Gorelick when she said, "The accessibility of C-SPAN to our prisons has made for a kind of an interesting communication, if you will, between Congress and our inmate population."

If this "communication" is "interesting," it is because it might yet be productive. True, the majority of Congress is insisting upon prison sentences of peculiar harshness, and true, the prisoners can only rattle the bars of their cells in rage and frustration. But the two sides are engaged.

"I'm actually optimistic that Congress is going to do the right thing within the next couple of years," said Julie Stewart, leader of Families Against Mandatory Minimums, a sentencing reform group. "Even opponents of eliminating the disparity are saying that 100-1 is too much."

One thing that might foster consensus about cocaine sentences and help bridge the racial gap is to address the question: Why did Congress decide to crack down on the lowest level of the cocaine trade in 1986?

The answer lies in the forgotten history of the illicit drug business in America, especially in the political realities created by the astonishing river of cash and cocaine that flowed through Miami between 1975 and 1986.

Among the first serious students of the contemporary drug economy was a Treasury Department bureaucrat named Robert Stankey. Suspicious of cash deposits at Miami banks in the mid-1970s, Stankey prodded the Federal Reserve into doing a systematic study of the issue. That study, released in September 1979, found that the Federal Reserve branch in Miami had taken in $2.4 billion more in cash than it had paid out in 1978. This difference was dubbed the "cash surplus," and it quickly became accepted as a rough index of the drug business.

It wasn't hard to figure out what was going on. Drug dealers from around the country were flocking to Florida, cash in hand, to purchase marijuana and cocaine from Colombian and Cuban-American importers. They returned to their home cities to sell the stuff while the importers and suppliers deposited their cash profits in local banks.

"There is no other logical explanation for this rise in deposits other than that most of it is money generated from drug trafficking," explained a Justice Department memo at the time.

In July 1980, Stankey's study had led to the creation of Operation Greenback, a senior inter-agency task force in Washington whose mission was to crack down on drug-related banking practices. IRS and Treasury officials began examining the practices of 25 Miami banks, while Congress acted to tighten currency reporting laws. All the while, the cash continued to pile up in a few Miami banks. In 1979, the cash surplus in Miami jumped to $3.9 billion; in 1980 it jumped again to more than $4.5 billion.

In the first year of Greenback, agents seized $14 million in cash from various suspected traffickers as well as seven planes and had found paper traces of much larger cash flows. The U.S. attorney in Miami alleged that one bank had laundered $60 million. Then in August 1981, Greenback investigators seized a suspicious account at a growing Miami financial institution called Capital Bank.

This account was probably not unique, but a federal judge's findings in the forfeiture case that followed provided a glimpse of just how entrenched and huge the drug money business had become. The account had been opened in March 1980 by a currency trader from Cali, Colombia, after he personally met with Abel Holtz, the bank's founder and president. Soon after, couriers began arriving two or three times per week laden with boxes, duffel bags and shopping bags full of cash. In the first eight months of 1981, $242 million in cash was deposited into a single account. The bank's fee by then was $300,000 per month. Holtz "knew or reasonably should have known that the cash \. \. \. was drug-tainted," the federal judge later concluded. While a quarter of a billion dollars is a lot of money, it was only a small portion of the $4.5 billion cash surplus recorded in Miami in 1981. Capital Bank could not have been alone among Miami financial institutions in handling narcotics receipts.

The Capital Bank case also illustrated the difficulties of going after profiteers at the top of the drug finance sector. Abel Holtz may have cashed in by doing business with the Cali-based money changer but he and his bank had not violated any currency reporting laws in effect at the time. Moreover, he was a powerful man in Miami where a major downtown street was named Abel Holtz Boulevard. While he remained under investigation for money laundering in the early 1980s, he opened a Capital Bank branch one block from the White House in Washington and hired a former U.S. senator, Richard Stone, to serve as the vice chairman of the board.

Holtz's Washington connections served him well. He enlisted power broker Edward Bennett Williams to fend off the ongoing investigation. According to Evan Thomas's biography of Williams, Holtz was "within days of being indicted" on money laundering charges, when Williams's clever legal maneuvers stalled and then intimidated prosecutors into backing off. Holtz was eventually cleared of any wrongdoing. (In Oct. 1994, Holtz pleaded guilty to obstruction of justice in a grand jury investigation involving the former mayor of Miami Beach.)

Operation Greenback did score successes, returning 25 indictments against 97 defendants in its first two years, but the political landscape was changing. By 1982 Ronald Reagan was in the White House and putting his own stamp on drug enforcement. While Operation Greenback was based on close scrutiny of bank operations, the new administration was philosophically committed to easing regulatory requirements.

Reagan's anti-drug campaign, lead by Vice President George Bush, preferred to emphasize the interdiction of drug shipments and enlisted U.S. military personnel in the drug war for the first time. In late 1982, Operation Greenback converted from an inter-agency task force in Washington run by ranking Cabinet officials to a component office of the U.S. attorney's Office. It continued to make major cases "but Reagan failed to put an emphasis in that area," says Robert Shankey, now retired. "They just didn't send down the resources to control the problem."

The daily flow of cash into Miami banks continued. In 1982 the cash surplus dipped slightly but still topped $4 billion. While Bush claimed in June 1982 that the administration had cut drug trafficking in south Florida "to a trickle," all other indicators suggested the federal government was being overwhelmed by the growing capacity of Colombian drug trafficking networks. In March 1982, federal agents had seized a 3,700-pound cocaine shipment at the Tampa airport -- quadruple the size of the previous record seizure.

Most tellingly, the price of cocaine on the streets of Miami was dropping steadily. A kilo of cocaine, which had cost $47,000 to $60,000 in 1982, cost only $25,000 to $30,000 in 1983, according to the Narcotics Intelligence Estimate, the summary of the federal government's best information on the drug trade. Since demand for cocaine was still close to an all-time high, according to drug use surveys, the most plausible explanation for rapidly falling prices was a growing supply.

As the glut of cocaine was distributed into urban America, black criminals began to gravitate to the trade. "At the lower level of wholesale and retail composition of the cocaine traffic remained mixed," the 1983 Narcotics Intelligence Estimate noted, "but black violators became increasingly dominant and well-organized."

Entrepreneurial minds in the ghetto sought ways to cash in. In 1985 drug dealers in New York began mixing their cocaine with baking soda and selling it in crystalline smokable form dubbed "crack." Instead of selling hard-to-manage grams of cocaine of $100, dealers could sell "rocks" for $5 or $10. Crack spread rapidly through American cities in 1986.

"Anybody can buy powder and double their money by cooking it up into crack," notes Ethan Nadelmann, the head of the Lindesmith Center, a drug policy think tank funded by billionaire George Soros. "That means there is easy entry to business and it means that the business revolves less around controlling the drug than around controlling the turf. That means more violence."

After the 1986 overdose death of Len Bias, the University of Maryland basketball star, Congress imposed mandatory minimums for cocaine offenses and instituted the very low thresholds for crack offenders. But the House Judiciary Committee was quite explicit that crack dealers were not the primary target of the law, stating that "the federal government's most intense focus ought to be on major traffickers, the manufacturers or heads of organizations, who are responsible for creating and delivering very large quantities of drugs."

A "second level of focus," the committee said "ought to be on the managers of the retail level traffic, the person who is \. \. \. packing crack into vials \. \. \. in substantial street quantities."

Eric Sterling, the former majority counsel for the House subcommittee on crime, argues that the failure of federal law enforcement officials to follow the priorities of Congress in 1986 is at the heart of today's sentencing controversy.

"Only 11 percent of drug offenders in federal prison are high-level while more than 50 percent are low-level," Sterling, the head of the Criminal Justice Policy Foundation in Washington, says, citing the findings of the Sentencing Commission. "For the DEA and Justice to prosecute so many crack cases, instead of sending them to state court where most of them belong, is prosecutorial malpractice."

But it's not like U.S. drug enforcement has gone easy against the drug kingpins. Since 1986, drug enforcement agents have consistently made major cases against leading traffickers and their collaborators such as Carlos Lehder and Manual Noriega. Nor has the financial law enforcement effort slackened. Investigations with code names like Operation Pisces and Operation Polar Cap resulted in seizures of millions of dollars from drug trafficking organizations and scores of indictments. Just last month, President Clinton issued a classified executive order seeking to block assets of suspected Colombian kingpins.

Rather, it is the pyramid shape of the drug business -- a handful of large importers at the top and tens of thousands of dealers at the bottom -- which inevitably shapes the law enforcement response. The nature of the drug economy and the obligations of the "get tough" laws direct law enforcement resources toward middle- and lower-level traffickers. This is not the work of an overarching white conspiracy (as polls show that many blacks fear) but the effect of routine political and policy decisions.

What about the charge that crack sentencing laws are racist? That depends largely on whether you think racism requires conscious intent. Evidence that advocates of tough crack sentences have a deliberate racial double standard is hard to come by. Evidence of unconscious bias is not.

In defending special punitive measures for crack, for example, the conservative Weekly Standard noted that "only" 48 young, non-violent minority males with no prior records were sent to federal prison last year for crack offenses. Imagine if 48 young, non-violent, cocaine-sniffing white conservatives with no prior record had been sent to federal prison by the Clinton Justice Department last year. Imagine the justifiable anger at the waste of law enforcement resources and young lives.

"Let us be honest," Rep. Barney Frank (D-Mass.) said during the House debate. "Many members here were disappointed a march by Louis Farrakhan got such enthusiasm. I ask Why do you think this is happening?' "

The answer is in our history. From 1979 to 1986, the U.S. government utterly failed in its efforts to police the commanding heights of the drug economy. The result was a cocaine glut and the emergence of crack. In 1986, the U.S. government responded to this failure by targeting the lowest level of the cocaine distribution system -- crack dealers -- for special punitive treatment. Nine years later, we have a glut of unfree black men, many willing to atone, others ready to go on a rampage. Jefferson Morley is an editor in Outlook.