IN ORDER TO LEARN THE DIMENSIONS OF THE ARSON PROBLEM, INVESTIGATORS INTERVIEWED POLICE AND FIRE OFFICIALS, REPRESENTATIVES FROM THE INSURANCE INDUSTRY, PROSECUTORS, STATE FIRE MARSHALS, PUBLIC ADJUSTORS, PRIVATE ARSON INVESTIGATORS, CRIME LAB TECHNICIANS, MEDICAL EXAMINERS, AND CONVICTED ARSONISTS. THIS REPORT DISCUSSES THE PROBLEM OF ARSON IN CHICAGO, THROUGHOUT ILLINOIS, AND ACROSS THE NATION. IT IS NOTED THAT THE LACK OF PROPER RECORDKEEPING AND INCOMPLETE STATISTICS MAKE IT DIFFICULT TO MEASURE THE GROWTH OF THE ARSON PROBLEM. A DESCRIPTION IS PROVIDED OF THE MOST PREVALENT FORMS OF ARSON IN ILLINOIS -- VANDAL RELATED ARSON AND ARSON-FOR-PROFIT SCHEMES. AN EXAMINATION DISCUSSES THE MOTIVES FOR COMMITTING ARSON AND A PROFILE OF A CONVICTED ARSONIST IS INCLUDED. INVESTIGATORS INTERVIEWED 18 CONVICTED ARSONISTS AND ALTHOUGH NONE OF THESE COULD BE CONSIDERED PROTOTYPE ARSONISTS, THE INTERVIEW PROVIDED MUCH INFORMATION ON HOW SOMEONE GOES ABOUT HIRING ARSONISTS AND THE ROLE OF THE MIDDLEMAN IN AN ARSON-FOR-PROFIT SCHEME. A DESCRIPTION IS PRESENTED OF THE TYPICAL ARSON-FOR-PROFIT, THE HEART OF THE REPORT IS A ANALYSIS OF THE ARSON PROBLEM AND THE DIFFICULTY OF GETTING AN ARREST AND CONVICTION. JURISDICTIONAL QUESTIONS, PROBLEMS IN GATHERING EVIDENCE, THE LACK OF TRAINING FOR ARSON INVESTIGATORS, THE ROLE OF INSURANCE COMPANIES, THE COMPLEX NATURE OF ARSON-FOR-PROFIT, PROBLEMS IN REPORTING AND OBTAINING ARSON STATISTICS, AND BOARD-UP SERVICES AND PUBLIC ADJUSTERS ARE DISCUSSED. TO DEVELOP A FIRSTHAND UNDERSTANDING OF THE DIFFICULTIES INHERENT IN AN ARSON INVESTIGATION, INVESTIGATORS CHECKED OUT A SUSPICIOUS RESIDENTIAL FIRE IN CHICAGO; A DETAILED DESCRIPTION OF THE EFFORT IS PROVIDED. IT IS NOTED THAT THE INVESTIGATION DEMONSTRATED THE CURSORY NATURE OF THE CHICAGO POLICE DEPARTMENT'S BOMB AND ARSON UNIT INVESTIGATION OF THE SAME INCIDENT. A CATALOG IS PRESENTED OF THE PROGRAMS ESTABLISHED TO COMBAT ARSON IN THE STATE. A NUMBER OF PROFESSIONAL ORGANIZATIONS, THE STATE FIRE MARSHAL'S OFFICE, AND THE STATE DEPARTMENT OF LAW ENFORCEMENT ARE ALL INVOLVED IN ARSON DETECTION AND PREVENTION. ADDITIONALLY, INVESTIGATORS TRAVELED TO SEATTLE (WASH.), HOUSTON (TEX.) AND NEW YORK CITY TO LEARN HOW OTHER MAJOR URBAN AREAS HANDLE THE ARSON PROBLEM; AN ARSON UNIT COMPARISON IS PROVIDED. IT IS CONCLUDED THAT THE ARSON PROBLEM REQUIRES A TWO-PRONGED ATTACK: EXPANDING PREVENTION EFFORTS AND UPGRADING ARSON DETECTION. APPENDED MATERIAL INCLUDES INFORMATION ON DOLLAR LOSS RESULTING FROM ARSON, SEATTLE'S ARSON TRAINING PROGRAM, AND HIGHLIGHTS OF HOUSTON'S ARSON TRAINING PROJECT. (KBL)