NEW HAVEN, Conn. (AP) _ A collection of papers of a leading 1920s literary magazine was acquired Friday by Yale University, allaying fears among scholars that the letters and manuscripts would be divided among private collectors.

The Dial magazine papers have been on loan to Yale's Beinecke Rare Book and Manuscript Library since 1950.

The Dial collection includes letters and manuscripts from many major writers of the 1920s, including D.H. Lawrence, James Joyce and Ezra Pound. They were part of the estate of the magazine's co-owner and editor, Scofield Thayer, who died in 1982.

No sale price was disclosed by Sotheby's, The New York auction house charged with selling the papers. Scholars estimated that the asking price was $1 million.

David Redden, director of books and manuscripts at Sotheby's, said ''a fair price'' was paid. He declined to say how many bid for the collection but said there was ''some considerable interest, but at the end of the day Yale was the obvious choice.''

The collection was purchased with funds from Yale and the Beinecke Foundation. The foundation, established by the Edwin Beinecke family, has made numerous donations to Yale in past years.

Beinecke director Ralph Franklin said he was ''pleased that integrity of those important materials would be preserved.''

John R. Robinson, president of the Beinecke Foundation, has called the collection ''one of the finest and most important collections of American literary documents of the 20th century that should be preserved intact at Yale.''

Thayer's four heirs originally intended to split the collection and auction off parts separately in June at Sotheby's in New York, scholars say. But protests by scholars, who feared they would not be able to use the documents for research if they were sold privately, led to a change of plans.

The Thayer papers began coming to Yale on loan in 1950, with other installments coming later, said Donald Gallup, retired curator of Beincke's American literature collection.

They represent at least several file drawers of documents and include scrapbooks and bound volumes of the magazine, Gallup said.

The Dial, in its heyday in the 1920s, ''established modernism. It put it into the mainstream,'' said writer Dale Davis, executive director of the New York State Literary Center.

Among the papers are letters by Sigmund Freud, William Butler Yeats, George Santayana and H.L. Mencken. There are also manuscripts of poems by T.S. Eliot and short stories by Lawrence, Gallup said.

Besides publishing major authors, The Dial also reproduced the works of leading artists and photographers. The New York-based magazine folded in 1929, 10 years after Thayer and Watson had purchased and revived it.