AN INVESTIGATION OF THE RELATIONSHIP BETWEEN COMPETENCE IN COMMUNICATION AND LEARNING POTENTIAL OF APPROXIMATELY 500 MENTALLY RETARDED CHILDREN, AGES 3 TO 9, WAS CONDUCTED. CONCERN WITH CARELESS DESIGNATION OF MENTAL RETARDATION AS A CAUSE OF DELAYED SPEECH LED TO A STUDY OF 1,200 CASE HISTORIES. MANY OF THESE CASE HISTORIES WERE DIAGNOSED CORRECTLY. HOWEVER, CAUSES WERE OBSCURE FOR NEARLY 30 PERCENT, CREATING DANGER OF FALSE DIAGNOSIS OF MENTAL RETARDATION. A FACTOR ANALYSIS OF 100 HISTORY AND TEST ITEMS ADMINISTERED BY A DIAGNOSTIC TEAM ADDED UNIFORMITY TO THE STUDY. THROUGH EXTENSIVE ANALYSIS EACH CHILD WAS CLASSIFIED IN ONE OF SIX CATEGORIES--LANGUAGE DISORDERS, EMOTIONAL DISTURBANCES, MENTAL RETARDATION, LESSER PROPORTIONS OF HEARING LOSS, ARTICULATION DISORDERS, AND IMMATURE BEHAVIOR. ALSO, A NONDIFFERENTIATED GROUP OF CHILDREN WHO COULD NOT BE DIAGNOSED WAS FORMED. SEVERAL ITEMS TENDED TO LINK THE MENTAL RETARDATION, LANGUAGE DISORDERS, AND NONDIFFERENTIATION GROUPS. ALL WERE SLOW IN DEVELOPMENTAL ITEMS AND POOR ON FORM BOARDS AND GEOMETRIC DESIGNS. INTELLIGENCE TEST SCORES WERE BELOW NORMAL, HOWEVER, WHEN INTELLIGENCE POTENTIAL WAS ESTIMATED, THE CHILDREN WITH LANGUAGE DISORDERS WERE FOUND TO BE WITHIN NORMAL RANGE. THE NONDIFFERENTIATED GROUP ALSO IMPROVED 10 POINTS APPROACHING NORMAL RANGE. THE MENTAL RETARDATION GROUP DID NOT CHANGE FROM ONE TEST SITUATION TO ANOTHER. THE ARTICULATION DISORDERS AND IMMATURE BEHAVIOR GROUPS WERE FAR SUPERIOR TO OTHER GROUPS. CHILDREN WITH LANGUAGE DISORDERS MUST BE EDUCATED IN AN ENVIRONMENT THAT GRADUALLY REDUCES THE CHILD'S NEED FOR STRUCTURE RATHER THAN PERPETUATES THIS NEED BY PROVIDING STRUCTURE TO SUCH A DEGREE THAT THE CHILD'S ADAPTATION TO EVERYDAY CHANGE IS IMPOSSIBLE. AN URGENT NEED FOR NEW STUDIES OF THE WHOLE APPROACH TO THESE CHILDREN IN A THERAPEUTIC SETTING IS RECOMMENDED. (GC)