FOLLOWING A DISCUSSION OF THE STEPS AND SPECIALIZED KNOWLEDGE REQUIRED FOR EFFECTIVE ARSON INVESTIGATION, STATISTICS REVEALING THE EXTENT OF FINANCIAL LOSS DUE TO ARSON IN 1974 AND 1975 ARE REPORTED. THE PROBLEM IS PARTICULARLY ACUTE IN NEW YORK CITY WHERE THE VOLUME OF ARSON CASES OVERWHELMS THE RELATIVELY SMALL NUMBER OF TRAINED INVESTIGATORS. A FURTHER PROBLEM IS THE LACK OF COORDINATION BETWEEN THE FIRE AND POLICE DEPARTMENTS IN INVESTIGATING ARSON. CURRENTLY, EACH AGENCY HAS THE RESPONSIBILITY AND JURISDICTION TO INVESTIGATE ARSON, WHICH FREQUENTLY RESULTS IN DUPLICATING INVESTIGATIVE EFFORTS. A COORDINATED EFFORT IS IMPEDED BY RIVALRY AND FEARS OF ENCROACHMENT ON INVESTIGATIVE CAREERS AND AGENCY AUTHORITY. THE NEW YORK CITY ARSON STRIKE FORCE, WHICH HAS EXAMINED THE PROBLEM, HAS DEVELOPED FOUR ALTERNATIVE PROPOSALS FOR RESOLVING THE ARSON INVESTIGATIVE CONFLICTS: (1) GIVE PRIMARY INVESTIGATIVE RESPONSIBILITY TO THE FIRE MARSHALS, WITH POLICE BEING CALLED WHEN NECESSARY; (2) GIVE TOTAL RESPONSIBILITY FOR ARSON INVESTIGATION TO THE POLICE DEPARTMENT; (3) DEVELOP A NEW INVESTIGATIVE AGENCY COMPOSED OF TEAMS OF FIRE MARSHALS AND POLICE DETECTIVES; AND (4) DEVELOP A TASK FORCE UNIT COMPOSED OF REPRESENTATIVES FROM APPROPRIATE GROUPS, WHICH WILL COORDINATE ARSON INVESTIGATION EFFORTS. IT IS CONCLUDED THAT GIVING PRIMARY RESPONSIBILITY FOR ARSON INVESTIGATION TO THE FIRE DEPARTMENT IS PREFERABLE DUE TO THE FIRE MARSHALS' EXPERIENCE AND HIGH MOTIVATION IN DEALING WITH THE PROBLEM. FURTHER, IT IS SUGGESTED THAT A HIGHLY QUALIFIED POLICE OFFICER BE ASSIGNED TO THE FIRE DEPARTMENT TO ACT AS A LIAISON BETWEEN THE POLICE AND FIRE DEPARTMENTS. (RCB)