The late 1960s were an age of supposed reform in American education, and two of the brightest ideas involved using some good old-fashioned economic competition to pep up U.S. school systems.

Give teachers and schools a dollar incentive, as in the world of business the concept went, and they'd teach harder; children would learn more.

One of the ideas was called vouchers, the other performance contracts.

Both have been near-total failures. And today not one of the nation's 17,000 school systems is using either one, one.

"For all practical purposes, both of them disappeared," says Jeff Schiller of the National Institute of Education. "They died.And nobody ever gave them a decent burial."

The official reason: the schemes simply didn't work. Competition and business know-how didn't perform the classroom wonders that the reformers had forecast.

In addition, both ideas overestimated the demand for change in the way public education works.Most teachers and school administrators refused to have anything to do with the reforms. Parents also declined to go to the barricades to alter the status quo.

Both vouchers and performance contracts had a basic gut-level appeal. They were quick-fix solutions, based on the notion that entrenched professional educators had fouled up the nation's schools, and that the rascals ought to be thrown out - or at least given some competition.

Each followed a different course. Vouchers would end "the monopoly of the public education system" by giving aid directly to parents so they could put their children in the schools of their choice. Good schools would prosper; bad ones would fail. Performance contracts would show that private companies - or individual teachers - would do a better job of teaching if they were paid more as students learned more.

"Washington, or at least part of it, bought both ideas and sent its bereaucrats peddling them like a new snake oil to school systems around the country.

Performance contracts had the shortest run as an educational fad.They began with rave notices after Texarkana, Ark., schools contracted with a private firm to teach disadvantaged children. The firm doubled, and in some cases tripled, student's normal achievement gains. Soon educators from around the country were beating a path to Texarkana.

By 1969, 200 school systems were considering adopting similar programs. More than 100 did during the 1970-71 school year.

The Nixon administration encouraged them, hastily funding programs in 20 school districts through the old Office of Economic Opportunity. The appeal to Republican policymakers and school boards was obvious. School systems could turn over classes, and even entire schools, to private contractors. The contractors would be paid only if they delivered results.

Those results, however, were disappointing at best. Students in most sites did only slightly better in math and reading than their peers in regular classes. But they had worse attendance records and performed poorly in classes not taught by private contractors.

The performance contract quickly went out of vogue. All but one of the 20 school systems that OEO funded in 1970 dropped the experiment after one year. And the largest and most publicized experiment after one year. And the largest and most publicized experimental site, Banneker Elementar in Gary, Ind., ended its contract with its private contractor in 1972, a year ahead of schedule.

"I'm not sure if anyone is doing it (performance contracts) anymore," says Gary superintendent Gordon McAndrew. "There's no burning, passionate drive to continue it. Some of it was a fad, just like 'back to basics' is a fad now. A lot of the contractors got into it for a fast buck, and they didn't design their programs with enough care. They killed the goose that laid the golden egg.

"The companies found education wasn't as easy or as profitable as they thought," he adds. "From a school systems point of view, the expectations were too high, and we all encountered very strong oppositions from teachers groups."

Vouchers were even more controversial. "Basically, as unhappy as parents were with their schools, vouchers were simply too radical a solution for them," says David Mandel, and NIE analyst. "We couldn't even give money away to get school systems to try the idea."

On the surface, vouchers appeared simple enough. According to their chief theoretician, economist Milton Friedman, the trouble with American schools was that they were run by "the public school monopoly," which, like all monopolies, was inefficient and unresponsive to consumers. If parents were given vouchers, worth a year's tuition, schools would be forced to perform or lose their students. The balance of power in education would shift from professional educators to parents.

The idea appealed to hard-nosed businessmen, conservatives and liberals who were pressing for "parent power," and more diversity in education. But school administrators, teachers and civil rights groups rebelled violently against it.

"There's nothing more ignorant than the assumption that competition is good for education," says Dr. David Darland of the National Education Association instructional division.

OEO and NIE serched for five years to find a place to try the idea out. But city after city refused to undertake it. East Hartford, Conn., and five districts in New Hampshire came close, but all eventually voted to drop out after lengthy feasibility studies.

An NIE report on the two attempts concluded that "vouchers, a program to bring parents a direct role in the education of their children, never stimulated much interest or involvement on the part of parents . . . most parents were never turned on by the concept."

A study published in the current issue of Public Interest, about the only school system - an elementary district in Alum Rock. Calif. - to actually test the paln, came to the same conclusion. "The voucher idea was simply based on a serious overestimate of popular discontent and demand for change in education," wrote authors David Cohen and Barbara Farrar.

Alum Rock spent four years and $8 million in federal money testing a modified form of the voucher system. But it has now dropped many aspects of the plan, and has changed its name to an "open enrollment program."

"The word voucher is too emotionally charged here," explains a school superintendent William Jeffords.

Ironically, both Jeffords and Gary superindent McAndrew claim that while their brush with experimentation created controversy, it did help their schools over the long run.

Banneker Elementary in Gary, for instance, continued using material its private contractor developed, and two years ago reading and math test scores began to improve dramatically. In Alum Rock, Jeffords claims, schools are more decentralized and parents have a greater voice in school affairs than they did five years ago. "I've heard people call it a failure, but we don't view it that way," he says.

"Who knows," says McAndrew, "in a few years maybe someone will trumpet these things again and we'll all be off running again."