Outstanding picture books; Three is Company, by Friedrich Karl Waechter. Garden City, N.Y.: Doubleday & Co. $8.95.; The Rain Forest Children, by Margaret E. Pittaway, illustrated by Heather Philpott. New Y ork: Oxford University Press. $7.95.

After reading a stack of this season's new books for young children, I've drawn th conclusion that some possibly nutritious but pretty dull mush is still being offered for the youngest readers.

Worse, perhaps, than mush, however, is cod liver oil. I shuddered over the diet of moral advice-laden and didactic tales, barely disguised as pictures books, published this season for little children.

This unpalatable fare has something to do with the way adults view the intelligence of children. But the best younger children's books this season reminded me that kids are uniquely brilliant. Their world, while unsophisticated, is in many ways as rich and full as the adult world.

"Three is Company," by Friedrich Karl Waechter stands out among this season's picture books because of its wonderful inventive simplicity. It's a truly intelligent story about kids finding friends. Of course, in this case, the "kids" happen to be a pig, a bird, and a fish. Waechter, who wrote the story and did the superb line drawings in pale hues, knows how to use symmetry, balance, and repetition to create a book which truly surpasses others of its kind.

Philip, the bird, is tired of practicing his "loop-the-looping" and thinks he'll just take a little dip in the fishpond. When Harold, the fish, comes to help his new friend with swimming lessons, Ivy, the pig, can hardly believe her eyes. But soon the three are fast friends, and their parents are amazed at how happy their kids have become.

Harry Allard, who translated this story from its German original, has an ear for the right English expression. And Waechter's varied and inventive graphic design is wonderfully engaging.

Margaret Tittaway's "The Rain Forest Children" is another story that honors the intelligence of very young readers. This fantasy about two children from the Queensland Rain Forest in northeastern Australia is rich and accurate in natural detail. Though elements of the story are purely imaginary, it offers at the same time a wonderful early lesson in natural history.

"The Rain Forest Children" involves a bit more text than does "Three is Company," but the clarity and simplicity of its story and its beautiful, precise illustrations keep it well within the picture book category. Latana and Rufus, strangely self-sufficient in their lush forest world, one day overhear the bush people talking about a bright golden world at the land's edge. Though happy in their rich natural world the two decide to set out for this beautiful distant place.

Their simple journey across tropical Australia -- through the forests and grasslands, across beautiful farmlands and plantations, through the mangrove swamps, to the ocean -- makes the substance of this story. In each new environment, the children's curiosity opens up for them strange though accurate beauties. Each of Heather Philpott's careful, colorful illustrations asks the reader to stop and examine a new part of the tropical landscape.

Once the children reach the beach, their quest is fulfilled. After exploring the shore and the undersea world, the rain forest children realize that they must return to the lush green world which is their home. Because of the beautiful accuracy of Tittaway and Philpott's observations along the way, this simple tale of the children's journey is enough. The attention they both bring to the details of this tropical voyage provide the subject matter of a story far more attractive and engaging than most recently published for this age group.

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