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ONE DAY 18 YEARS AGO, A YOUNG SCULPtor named Tony Jones entered the cavernous mold for one of his works in progress, unaware that he was about to become an ex-sculptor.

Known for large, outdoor pieces that encouraged viewers to walk and climb on them, Jones crafted his creations from rugged materials-fiberglass and resin, the same stuff used to make Corvette sports-car bodies. The trouble is, these compounds are highly toxic to work with. As he set about coating the inside of his mold with glops of resin, Jones was wearing a double-nozzled gas mask that gave him the look of an overlarge insect. In retrospect, he says, he should have used something more effective, like a scuba system.

Thanks to two students who shared his studio, Jones escaped what might have been a tragedy. Checking on him after a long period of silence, they found him unconscious, overcome by fumes. Ludicrously, parts of him-the back of his head, his shirt, his trouser bottoms, his shoes-were glued fast to the sculpture by the quick-drying resin. Grabbing an artists` knife, the pair cut his hair, slipped him out of his clothing (one shoe is still stuck inside the sculpture after all these years) and rushed him to the hospital.

Jones recovered from what might have been a disabling, even fatal, case of poisoning. But he was left with an extreme allergy to fiberglass and other plastics. Convinced he could not make his brand of art from any other materials, he decided to hang it up as a sculptor.

It was this accident of fate, more than anything else, that propelled Tony Jones into university administration, an arena that arguably should have been more low-risk. Instead, as the embattled president of Chicago`s venerable School of the Art Institute, Jones has been thrust into a crucible as harrowing as the interior of the patricidal sculpture that tried to destroy him.

Within months of assuming the helm of the school in 1986, he became embroiled in the now-infamous flap over a student painting depicting the late Mayor Harold Washington in ladies` underclothes. In that controversy, he went toe-to-toe with outraged black City Council members trying to nuke the piece. A year later, he was forced to circle the wagons again, defending another student work, one that indecorously displayed the American flag, from attack by various patriotic organizations. In his third year, he scored a hat trick, this time upsetting his own student body by refusing to exhibit the flag piece a second time.

He has been spat upon by aldermen, had garbage hurled at him by crowds of demonstrators and even met the woman who would become his current wife when, in his beleaguerment, she reached out to offer him a sympathetic ear. To some, he is a courageous defender of artistic expression, a catalyst whose actions during the Harold Washington and flag controversies helped shape the current national debate over the limits of what artists can legitimately say and their right to be subsidized by taxpayers. Paradoxically, he is seen by others as a waffler, the mouthpiece for an Art Institute bureacracy fearful of new controversies that might offend its patrons and cut off the money supply.

The turmoil will not go away. Recently, Time magazine reported that Art Institute students suspect that a team of consultants hired by the school is really there to spy on their artwork to head off future public-relations disasters such as the flag and Harold Washington episodes. It is a charge that Jones furiously denies, but the fact that an international news organization would run such an item illustrates what a juicy media morsel the school has become.

”We`ve had a rough time,” sighs Jones, sitting in his eighth-floor office in the school`s newly acquired high-rise campus at 37 S. Wabash Ave., where the roar of passing elevated trains periodically blots out all speech and gives the place an Edward Hopper touch that seems appropriate for an art school. Above his desk, in a touch of whimsy, is a plaque that reads, ”This Is Our Flag, Be Proud of It,” given him by the Kiwanis Club of St. Charles.

”It`s been a long string of embarrassments for the whole Art Institute corporation. Not only did we have the Washington thing and the flag, but then there was the dispute with the Thai government (over a statue of the god Vishnu the Thais wanted returned). And then we had to admit we lost a painting by Georgia O`Keeffe. But we`re fair game. We have to live with it. When the Time thing broke, I was apoplectic for two minutes but then realized it`s part of the territory.”

Helping to keep Jones sanguine is the fact that for all its recent notoriety, the institution, under his tenure, has never been in better health. The 124-year-old school-whose alumni include so many eminent artists and designers it would take a full page to name them all (a partial list includes Ivan Albright, Thomas Hart Benton, Walt Disney, Red Grooms, Halston, Hugh Hefner, Herblock, Richard Hunt, Chuck Jones, LeRoy Neiman, Georgia O`Keeffe, Claes Oldenberg, Ed Paschke, Lorado Taft and Grant Wood) and whose

international prestige is such that Jones has taken to touting the place as

”America`s Studio”-has been remarkably successful with a student recruitment effort begun several years ago. In a time of declining enrollments at most colleges and universities, the School of the Art Institute has seen its student body grow by more than 50 percent in recent years, topping out this year at 1,675 students.

Financially, the school has become nearly self-supporting, thanks to its robust enrollment picture and a fundraising effort that dipped only slightly during the spate of controversy and then roared back. Unrestricted giving to the school-that is, money that can be used for any purpose-stood at $340,122 in fiscal 1988. It was up by 41 percent to $479,257 in fiscal year `90. Restricted giving-which generally goes for scholarships-totals out to another million dollars or so, with the rest of the school`s $20 million budget coming primarily from tuitions.

Jones is especially proud of what he has been able to accomplish in the realm of enlarging the physical plant and offering cutting-edge educational programs to complement the school`s traditional strength in drawing, painting, sculpture and ceramics. The goal is to attract a greater diversity of students, those whose interests range from architectural restoration to commercial advertising and fashion design and, in particular, the so-called

”MTV student (motivated technological visualizers),” the young person of the 1990s interested in multimedia work incorporating rock music and video as well as painting and the other fine arts.

By purchasing the 13-story Champlain Building on Wabash for $5 million as an adjunct to the familiar Columbus Drive facility in the south wing of the Art Institute, the school gained 30 percent more space to pursue these goals and was able to consolidate in two buildings departments that had been scattered in rental space throughout the city. The Champlain Building, which was completely gutted, has been outfitted to accommodate space-age art technologies using lasers, holography, interactive video, high-definition television and computer-aided design. A fiber-optic system links all floors to the computers so that, for example, a student can work in the fifth-floor computer lab and design a weave onscreen that will be robotically translated to looms in the ninth-floor macrame studio.

THE TOP OF THE building houses an expanded interior-architecture program from which one can see, across the street, the brooding gables of Frank Lloyd Wright`s former studio. On the 11th floor is a perfectly simulated advertising agency, and below that is a fashion-design room containing thousands of dollars` worth of originals, donated by society women, that are used as a teaching resource-Chanels, for instance, are turned inside out to learn how they are put together. At the Columbus Drive building, other dramatic changes have been undertaken. An 8,000-square-foot open courtyard, for example, is to be enclosed with a metal roof and skylight so that it can be used to create large-scale sculpture throughout the year.

Jones surveys his domain and likes what he sees. To him, it is a comforting metaphor-in the same way that turn-of-the-century men equated a paunch with success-that the Champlain Building`s ground floor is rented out to a walk-up branch of the First National Bank. ”I want to put a supergraphic on a window above the bank, to let people know the school is here and not just the bank,” he remarks one recent afternoon, as he and a visitor stand outside the building. ”It is a heady thought to be the landlord for the First National Bank.”

A compact, impeccably dressed man of seemingly limitless energy, Jones prowls his hallways restlessly, trading first-name greetings with students, administrators, faculty and maintenance workers, whoever falls within range of his penetrating but charming agate eyes. ”I like being seen,” he declares with conviction. ”I want to be involved. I don`t want to be one of those college presidents you never see.”

And yet, now in his fifth year at the school, Jones sits on top of an uneasy empire. These are perilous times to be running an art school. The arts have been under concerted attack from right-wing forces who think artists are abusing their First Amendment rights in a deliberate effort to undermine the values of American society with work that is obscene and blasphemous. How to inculcate in young art students a dedication to free expression, with all the iconoclasm that inevitably brings, while threading one`s way through an increasingly reactionary climate that could endanger the school`s funding picture is a challenge that would test the mettle of Solomon himself.

Job one is to figure out what the limits of free expression are-if indeed any exist. This requires answering questions philosophers have debated for thousands of years: What is art, what is its purpose and can its legitimate exercise ever go beyond the pale? Job two is to decide whether students should be accorded the same rights as their professional brethren, and if not, whether muzzling students might not somehow be at cross-purposes with art education.

Jones thinks it isn`t even possible to repress students. ”The idea,” he says, ”that anyone would think of art students being gentle flowers growing in a greenhouse is way off-base. They are heat-seeking missiles. If you ask them what their responsibility is, many of our students would say that it`s to ask questions, to have art say, `Well, I challenge your assumptions,` to point out that there`s an issue here you`ve forgotten or are glossing over, and that as an artist, I have a social conscience and I`ll use art as a weapon to rivet your attention.”

Echoes Kevin Consey, director of the Museum of Contemporary Art: ”I think an art school has to be on the edge. If you`re teaching students to think, you don`t put boundaries on where their thoughts can roam, particularly individuals who are dealing with ideas that can shape future generations. If you don`t equip young artists to challenge assumptions, you are not doing a good job of educating them.”

These issues are particularly pressing. The arts are under fire as they haven`t been for decades.

The last 18 months have seen a furious attempt in Congress to kill the National Endowment for the Arts, the federal agency that enraged conservatives by using tax money to fund controversial artists such as the late Robert Mapplethorpe and photographer Andres Serrano. Serrano`s ”Piss Christ,” which shows a plastic crucifix suspended in urine, brought down the wrath of the Rev. Donald Wildmon of Tupelo, Miss., whose American Family Association has previously urged boycotts of the likes of Playboy magazine, Martin Scorsese`s film ”The Last Temptation of Christ” and the television show ”Cheers.”

Mapplethorpe`s work is considered even more hateful. Interspersed with sublime still lifes and figure studies are graphic depictions of homoerotic and sadomasochistic behavior: a man urinating in another man`s mouth; a scowling, leather-clad Mapplethorpe inserting a bullwhip into his rectum. There are also two pictures of children with their genitals exposed.

In July of 1989, buckling under pressure from archconservative Sen. Jesse Helms (R-N.C.), Washington`s Corcoran Gallery of Art cancelled a Mapplethorpe exhibition that had raised no fuss when it appeared previously in Philadelphia and at Chicago`s Museum of Contemporary Art. Then, responding to a Congressional directive, NEA chairman John Frohnmayer began requiring all grant recipients to sign a pledge that they would not use the funds to create obscene work. Frohnmayer furthermore overrode the recommendations of his own peer review committees to reject the renewal of grants to four controversial artists, including feminist performance artist Karen Finley, who works topless, her body smeared with goopy food while she spits on the floor and utters scatological political invective.

The pressures on the NEA has subsided for the moment. Congress recently reauthorized its budget and decided to let the courts decide after the fact whether any federally subsidized works are obscene. The anti-obscenity pledge has been dropped as a condition for grants. But if a grantee is convicted of violating obscenity laws (U.S. Supreme Court guidelines define obscenity as that which is both prurient by community standards and without artistic, literary, scientific or political merit), the artist will have to give the money back and be barred from future grants.

Ominous developments now loom in the form of outright criminal prosecution. In Cincinnati, the Contemporary Arts Center and its director, Dennis Barrie, were recently tried for and acquitted of breaking obscenity laws for carrying the Mapplethorpe exhibit. In Ft. Lauderdale, the rap group 2 Live Crew was also acquitted of charges stemming from a nightclub performance that featured four-letter words and references to sexual organs. Not so lucky, ironically, was Florida record-store-owner Charles Freeman, who was convicted of obscenity for selling the controversial group`s album ”As Nasty as They Wanna Be,” which contains references to oral and anal sex and sexual violence against women and which has been declared obscene by a Broward County federal judge. In San Francisco, meanwhile, the FBI and local police raided photographer Jock Sturges` apartment, seizing his prints, negatives and equipment on grounds that his photographs of families and adolescent girls in the nude, which have been widely exhibited in museums and galleries, constituted child pornography.

But long before any of this, events at the School of the Art Institute had already set the tone for the escalating conflict between artists and would-be censors. ”We cut the string on Pandora`s box,” Jones says. ”We didn`t mean to do it, but we did. Everything that happened here was a microcosm of later events at the Corcoran and elsewhere.”

For two days in May of 1988, Chicago government nearly ground to a halt while aldermen, police and even Mayor Eugene Sawyer wrangled over what to do about a crudely executed painting of Harold Washington, who had been laid to rest barely six months before. The painting, entitled ”Mirth and Girth,”

portrayed Washington in bra, panties, garter belt and women`s hose, holding a pencil and looking forlorn. To the black community, it was an intolerable affront to the memory of the revered late mayor.

The painting, by student David Nelson, was entered in an annual fellowship competition among graduating seniors. Students pick their own work to hang in the show, and it goes up without prescreening. No one outside the school community is supposed to see the entries, but Nelson had drawn, by lot, a wall space close to the main entrance, a place anyone coming into the school could scarcely avoid. As a result, within hours, unknown parties infuriated by the painting had alerted virtually all of the city`s media and black politicians to its existence.

A circus ensued, with angry crowds, bomb threats, passage of a City Council resolution accusing Nelson of being ”demented” and, finally, a frontal assault on the school by 11 black aldermen, who seized the painting, carried it into Jones` office and threatened to burn it on the spot. For hours, the aldermen, led by Dorothy Tillman, Alan Streeter and Bobby Rush, argued with Jones, who though he had not seen the painting before Nelson hung it and agreed that it was offensive, was committed to protecting it from would-be censors and had defended displaying it to the point of having posted a guard in front of it. ”The painting is private property, and it`s in my care,” he fumed. At one point, one of the aldermen spat at him.

The standoff ended with police ”arresting” the painting, which by now had a five-inch gash in it, citing the need to avert a potential riot. The police explanation is suspect, however, since television footage clearly shows the aldermen carrying off the painting. To students assembled outside, it seemed that the state had suspended the First Amendment in a display more suited to Nazi Germany. Fistfights broke out, and students later told Jones:

”We loved Harold, man, but he would never have allowed something like this to happen. He was a libertarian.”