Intended to examine equity in values education in public school curricula, this comprehensive report is organized into two major sections. Section 1 is empirically oriented and presents evidence describing how religion and traditional values are represented in the nation's public school textbooks. Part 1 of section 1 (by Donald Oppewal) is a review of the already published literature on this topic. Part 2 of section 1 reports on how religion and traditional values are currently portrayed in a large and representative sample of the nation's textbooks. Four appendices, making up approximately half of the report, provide tables showing the 60 social studies books in the sample listed by publisher, grade, and title, followed by general summaries of major sections and emphases for each text. The books analyzed are: social studies, grades 1-6; American history, grades 11 or 12; and basal readers, grades 3 and 6. Section 2 addresses the question of why values should be taught, and if so, what rationale for teaching values is most defensible. Part 1 of section 2 (by Henrietta Schwartz) argues on the basis of anthropology that values are an inescapable part of any culture or subculture, such as schools. Part 2 of section 2 (by Edward A. Wynne) describes and extensively critiques the two most common rationales in the public schools for teaching values today--values clarification and Kohlberg's model of moral development. This part also presents a newly revived alternative approach to teaching values--an approach explicitly aimed at the development of character. (Author/LH)