Michael W. Sacks was practicing law with his good friend Harley J. Daniels in 1978 when Daniels asked him to take out a $1,000 loan from the National Bank of Washington and give the money to Sterling Tucker's campaign for mayor of the District of Columbia.

Daniels was heavily involved in the Tucker campaign, serving as its general counsel and chief of election-day operations. Sacks recalls that he was supportive of his law partner's endeavors, but probably would not have contributed to the campaign if Daniels had not arranged the loan.

Daniels told Sacks that the $1,000 would be repaid from future campaign funds. But when the time came for repayment, Sacks got only $250, he says.

The Tucker campaign received at least $12,000 from people such as Sacks, who borrowed from the bank and then gave it to the campaign. Tucker eventually raised more money than any other candidate in the crucial Democratic primary campaign.

With the assistance of that bountiful campaign chest, he was able to launch an early, expensive and unrivaled television advertising campaign that many Tucker strategists considered essential to maintaining the front-runner status he held until the final days of the campaign.

NBW's senior officers helped Tucker campaign aides disguise a $50,000 line of credit as a series of small contributions from individuals to the Tucker campaign. At least $12,000 was drawn under the line of credit, bank and campaign records show, all of it by individuals who took $950 or $1,000 each to avoid violating the limits set by campaign finance laws.

But the highly unusual loan procedures may have broken campaign laws anyway because the loans were made under circumstances different from those described to election officials who approved them.

Though some details of the arrangement were reported at the time, the existence of the $50,000 line of credit and how it was used have never been made public. The story of the contributions was reconstructed from among 3,000 pages of confidential NBW records obtained by The Washington Post and more than 100 interviews conducted during a five-month investigation.

The story of Michael Sacks and a dozen or more other "contributors" to the Tucker campaign show how a large bank can weild political influence. Financial institutions are among the major contributors to political campaigns in the District of Columbia, where businessmen, labor leaders, professionals and clergymen vie with one another for influence in city government.

Tucker, who was narrowly defeated in the primary and is now an assistant secretary in the Department of Housing and Urban Development, declined to comment directly on the loan, but said through an aide that lawyer Robert B. Washington Jr. had handled all the fund-raising activities for the campaign. Howard C. Davis, the D.C. dentist who served as the Tucker campaign's treasurer, was not available for comment.

Washington, who also is the chairman of the D.C. Democratic Party and a member of the Democratic National Committee, initially denied playing a role in the loan transaction. He then declined to comment in on the record. Later, however, he acknowledged that he had approached the bank for the $50,000 loan, which, he said, was not made due to legal problems. He would not elaborate.

Bank officials agreed to distribute funds under the line of credit after they received a legal opinion saying the smaller loans -- given to individuals who contributed the proceeds to the Tucker campaign -- would be legal under a prescribed set of circumstances. Legal Opinion Cited

The bank insisted that Tucker aides obtain a legal opinion justifying the procedure because campaign laws also forbade middlemen from making contributions for others.

That legal opinion was rendered by Winfred R. Mundle, general counsel to the D.C. Board of Elections and Ethics, based on a hypothetical set of facts provided by Tucker's campaign staff. The opinion was approved by the three-member elections board and was signed by board chairman Shari B. Kharasch.

However, the key assumption of the opinion, on which the legality of the highly unusual loan procedure rested, appears to be contradicted by the bank's own confidential record of the loan.

The assumption was that "the bank is not interested in supporting any candidate through a contribution by an intermediary, but rather in making a sound business transaction by which it will make money," Mundle's opinion said. Therefore, Mundle reasoned, "the loan is not being made for the purpose of financing any campaign" and was legal.

But in contrast, the confidential minutes of the National Bank of Washington executive committee for June 14, 1978, state forthrightly that the bank was approving the Tucker loan under a new policy to make such loans "in support of political campaigns." The interest rate applied to such loans under the policy was the bank's prime rate, usually reserved for its best corporate customers.

Legal details, the bank's executive committee said, would be left to the lawyers.

Moreover, the bank officials asserted that it was their civic duty to make such loans. There was no discussion that political loans would be a good financial investment for the bank, the minutes show.

"If they had disclosed those facts ahead of time, they would have gotten a different opinion," Mundle said recentlly. He would have ruled the loan procedure violated campaign finance laws, Mundle said.

After he was given an account of the bank's executive committee discussion in 1978, Mundle said the hypothetical facts presented to him to justify the loan had been "for lack of a better word, sanitized." Danzansky Favored Loan

One of the strongest supporters on the bank's executive committee for making the Tucker loan was the late Joseph B. Danzansky, then chairman of Giant Food Inc., an NBW director and a vital financial supporter of Tucker.

Danzanksy's immediate family and business interests contributed nearly $10,000 to Tucker's unsuccessful mayoral bid, campaign reports show.

The late Giant Food chairman was a founder of the law firm that carries his name -- Danzansky, Dickey, Tydings, Quint & Gordon -- and was a political mentor to Washington, a partner in the firm.

The first formal discussion of the $50,000 loan began on June 14, 1978, at the regular Wednesday morning meeting of the NBW executive committee.

NBW president Walton W. (Hank) Sanderson was presiding. When the committee reached the end of the agenda, Sanderson reported that Washington had requested a $50,000 loan "so that certain public relations activities requiring cash in advance could be undertaken" for the Tucker campaign. Sanderson described Washington as the treasurer of the Tucker campaign, though Howard Davis actually served in that capacity. (The mention of public relations activities requiring cash in advance apparently referred to television advertising.)

Sanderson reminded the NBW directors that the bank "had a history of loans" to the Democratic National Committee and in 1975 had helped finance the Citizens for Reagan campaign.

In describing the proposed loan to Tucker's campaign, "Mr. Sanderson indicated there was some uncertainty about the requirements and applicability of the District of Colubia law, but an opinion had been sought. . . ."

The directors debated at length the merits of getting involved in financing local political campaigns. Danzansky led the argument in favor of such funding, saying it was part of the bank's community service responsibility.

In the end, Danzansky offered a motion to authorize the officers of the bank to make loans without the executive committee's approval "in support of political campaigns pursuant to legal regulations and adhering to normal credit criteria . . . the recommended interest rate of such loans is NBW prime," according to committee minutes.

None of the other major mayoral candidates sought such assistance, according to bank officials. "Advisory Legal Opinion"

Mundles's opinion arrived at the bank in an envelope marked with the letterhead of the Danzansky, Dickey law firm. The opinion was addressed to no one. It was labeled an "advisory legal opinion" to consider "whether to is a violation of the D.C. campaign finance laws for an individual to secure a personal bank loan and transfer the proceeds, or some portion thereof, to a candidate or campaign committee as a personal loan to the campaign with the understanding that the loan would be repaid by the campaign's future contributions."

To begin his discussion, Mundle wrote, "It is clear that the proposed plan comtemplates a contribution from the individual to the candidate's campaign since [the definition of] contribution includes loans . . . The question, however, is whether . . . the loan from the bank to the individual could be viewed as a contribution by the bank to the candidate and, therefore, be a [illegal] contribution in the name of another."

Mundle pointed out that the definition of contribution under D.C. law was a "loan . . . made for the purpose of financing, directly or indirectly, the election campaign of a candidate. . . ."

From that point on in the legal opinion, Mundle spins a not-to-subtle web of logic to attempt to prove that the bank did not have politics on its mind when it made the loan:

"From the perspective of the bank, the loan is not being made 'for the purpose of financing' any campaign. There is a distinction between the bank's purpose in making a sound loan and the use to which the borrower will put the money."

"The purpose contemplated by the statute is the rationale, the motivation for making the loan. The loan is being made in the ordinary course of business for the purpose of making money for the bank through interest charges," Mundle concluded.

Mundle, who is no longer with the elections board, said recently that his opinions during the 1978 campaign often evolved from informal discussions with campaign officials in which hypothetical situations were put forward. Mundle said he would give "gut reactions" to these offerings, sometimes rejecting them and sometimes suggesting that under narrow and prescribed circumstances, a certain campaign activity could be construed as legal.

Mundle said this procedure evolved because of the absence of a legal-opinion research staff.

In the case of the NBW loans, Mundle said he recalls that Washington or his two top aides at the time, Daniels and Curtis A. Ritter, also a partner in the informal discussions that led to the legal opinion. Loans to Tucker Listed

Between July 3 and July 18, 1978, the Tucker campaign reported in its public campaign finance statements that it had received 12 loans from individuals totaling $12,600.Three of the loans came from members of the Danzansky, Dickey law firm and three from Daniels firm -- Daniels, Roth and Sacks. The loans were made by NBW.

But nowhere on the campaign disclosure report was it mentioned that the National Bank of Washington had assisted the Tucker campaign, even though the bank's executive committee had voted to support Tucker's campaign and had agreed to disburse as much as $50,000 in loans to him.

Moreover, contrary to the statement of facts set out in Mundle's opinion, the loans made by Sacks and others apparently were paid back only in part or not at all.

For instance, Sacks said he received only $250 back with a letter from the campaign expressing its regrets that it could not make full repayment. fAnother of the loan contributors, Steven M. Roth, also a law partner to Daniels, said that he never received repayment of his $1,000 loan to Tucker's campaign. He does recall, he said, repaying the bank.

An exact accounting of the loans disbursed to Tucker could not be determined by bank officials because each of the small loans was handled separately by bank officers. One bank official said that under the guidelines developed to disburse the loans, 100 or more small loans could have been made to Tucker's supporters without a central record grouping them together.

"It shows you," Mundle said, "what a bunch of lawyers can do when they put their heads together."