Due to a typographical error, a story in yesterday's editions of The Post stated that the Smithsonian Institution keeps $799,000 in private banks. The correct figure is $700,000.

The General Accounting Office has been asked to determine whether it was proper for Smithsonian Secretary S. Dillon Ripley to sit as a director of the American Security and Trust Co. at the same time the Smithsonian was depositing hundreds of thousands of dollars a year in noninterest-bearing accounts at the bank.

As a result of the arrangement, the Smithsonian appears to have lost thousands of dollars in interest by leaving its money in the checking accounts, rather than investing the funds in short-term securities. AS&-T did provide free checking and other services in return for the more than $500,000 in average month-end balances the Smithsonian kept at the bank.

Dwight Dyer, chief of staff for the Senate Appropriations Subcommittee on the Interior and related agencies, said that he learned of Ripley's membership on the AS&-T board and the Smithsonian's deposits late last summer. He said he sent a memo to the GAO to include this as part of an audit of the Smithsonian's books requested by the subcommittee last June.

Ripley quietly resigned from the bank board in December, just as the GAO was completing its audit. The GAO is supposed to have a report ready for the Senate subcommittee later this month.

In an interview in his office last Thursday, Ripley said he resigned from the AS&-T board after 10 years because "I'm tired. I just have less and less time (for outside activities) as the Smithsonian grows larger."

He said his resignation was unrelated to the GAO inquiry. Furthermore, he said, "the fact that I was a director of this bank was not a conflict of interest." There was "no favoritism" and "no partiality" shown toward AS&-T, Ripley said. He acknowledged that the Riggs National Bank handled most of the Smithsonian's accounts prior to his going on the AS&-T board in 1967.

He said the Smithsonian opened its first private bank account in 1847 and opened in 1927 its first account at a bank that became part of AS&-T.

According to the Smithsonian's financial records, approximately three-quarters of the $799,000 that the quasipublic Institution keeps in privat ebanks was deposited in checking accounts at AS&-T during the last 13 months Ripley served on the bank's board.

At prevailing 5 per cent short-term interest rates over that period, the Smithsonian could have earned about $25,000 a year in interest on the money. However, it was impossible to learn how much AS&-T free checking and other banking services were worth because the Smithsonian refused to explain exactly what services AS&-T provided.

Ripley received at least $2,400 a year in director's fees, according to a source at AS&-T. He owns 150 shares of AS&-T stock, which is close to the minimum that a director is required by law to own. Ripley said he knew nothing about where the Smithsonian was keeping its money during the period he served on the AS&-T board - or that the money was being kept in noninterest-bearing checking accounts.

"The treasurer (of the Smithsonian) has to organize these things," Ripley said. "I see what's in our financial report. And that's about all."

T. Ames Wheeler, the Smithsonian's treasurer, said he, too, knows little about where the Insitution deposits its money. Those decisions are made by Betty Morgan, an assistant treasurer, Wheeler said.

It was Morgan, Wheeler said, who decided to close one of the Smithsonian's AS&-T checking accounts last month. She will decide what to do about a second, much larger, account at AS&-T, Wheeler said. "She's very knowledgea*ble about the banking business," the treasurer said.

Despite his noninvolvement in the decision to close the one AS&-T account, which had average daily balances of $65,000 over the past 18 months, Wheeler said Morgan's decision was prompted in part by the GAO audit.

The auditors "certainly caused us to peer over in that direction. We looked at it (the account at AS&-T) and decided to put the money in the Treasury," Wheeler said.

The Smithsonian still maintains a second checking account at AS&-T, which had month-end balances over the past 18 months of about $450,000, Wheeler said. This account is one described by bankers as "non zero based," which means in effect that the Smithsonian had been using the account primarily for savings without receiving any interest.

Wheeler acknowledged that keeping large balances in noninterest-bearing checking accounts, whether at AS&-T or at the 24 other private banks where the Smithsonian has accounts, may not be the most efficient way for the Institution to be handling its money. "It pays to look at these things," Wheeler said. "Yes, it does."

Dyer indicated that the Senate subcommittee, which has grown increasingly concerned about the Smithsonian's handling of its federal and private funds, is certain to have questions about the use of private bank accounts at budget hearings next month. Dyer said it is not clear to him why the Smithsonian does not keep its unspent funds in the Treasury like other government agencies.

Another series of questions is likely to revolve around the Smithsonian Research Foundation, a private, non-profit corporation set up by the Smithsonian in 1966. The Foundation is never mentioned in any Smithsonian literature or its budget document, even though the Foundation is clearly related to the Smithsonian. Ripley, Wheeler, Morgan and two other Smithsonian officials serve as directors of the Foundation.

It was the Foundation's account at AS&-T that was closed last month.

According to an explanation of the Foundation's purpose and activities prepared at the Smithsonian at the request of The Washington Post, the Research Foundation was created in 1968 to handle search money appropriated by Congress to the Smithsonian.

By transferring the federal money from the Smithsonian's account at the Treasury to the Foundation, the Smithsonian was able to fund multi-year search projects and to hire scientists and other personnel for "flexible assignments outside of normal civil service requirements."

The Research Foundation will receive about $1.7 million during the current fiscal year from a variety of sources, according to the Smithsonian. Funding of this magnitude was kept the Foundation's account at AS&-T at about $65,000 a day over the past 18 months, ending last Sept. 30. The Smithsonian estimated that about 300 checks a month were written on this one account over that period.

Ripley said that Congress was told about the creation of the Smithsonian Research Foundation in 1965 or 1966.

The secretary said the absence of any reference to the Foundation in subsequent Smithsonian literature must have been "inadvertent."

Dyer said he could not say for sure that Ripley did not mention the Foundation sometime over the past 10 years. But he said he and members of the Senate subcommittee were unaware of its existence last summer when he learned about it from a source outside the Smithsonian hierarchy.

The subcommittee ordered the GAO audit in the first place after it found out about a $1 million contingency fund maintained for several years by Ripley. The secretary was getting the money from federal appropriations to various Smithsonian museums and departments, funds which were then partially turned over to Ripley for emergencies - without Congress' knowledge.

The contingency fund has now been discontinued.

The Smithsonian depends on federal appropriations for about 90 per cent of its $100 million annual budget. The remaining 10 per cent comes from private trust funds and donations.

Because of the way it was chartered by Congress, the Smithsonian is neither a fully public nor fully private institution. Ripley is paid out of the private funds, as are more than 1,000 of the Smithsonian's employees, and answers only to a board of regents composed of the Vice President, the Chief Justice of the United States, senators, representatives and private citizens.

Ripley said the Regents approved both the creation of the Research Foundation and his joining the AS&-T board of directors in 1967.

Sources within the Smithsonian say that the GAO audit and the resulting publicity have been painful both for Ripley and the Institution, which is accustomed to being described only in the most favorable light.