Packed with double barrels of Republican conservatism and downhome folksy ferver, political sharpshooter John B. Connally won the hearts - and probably some votes - of a group of 2,000 cheering independent business people meeting here.

While shooting down the administration for lack of leadership in solving the nation's problems, the Republican presidential contender fired off a few solutions of his own.

Among Connally's suggestions: Social Security reform, a plan to control illegal eliens, the development of a North American common market for oil, special investment programs for savers and hard line with the Japanese concerning trade.

In response to a question from the floor of the National Federation of Independent Business convention, Connally siad the Japanese should be forced to accept American grain and other surplus products, since Americans buy their goods, or the U.S. should let the Japanese "sit on the docks of Yokohama in their own Toyotas watching their own television sets."

That brought whoops, hollers and foot stamping from the crowd, which minutes before had booed and badgered House Ways and Means Committee Chairman Al Ullman (D-Ore..) who made some of the same points as Conally.

Connaly's message and magic roped more applause and ovations than Rep. Jack F. Kemp (R-N.Y.) who was well received early yesterday, Ullman and even Sen. Edward M. Kennedy (D-Mass.) who has swamped by autograph seekers and photographers before and after his address to the small business people on Monday.

The NFIB, which sponsored the speakers, traditionally has used its national convention as a forum for prospective presidential candidates. Sen. Robert Dole (R-Kan.) a declared Republican presidential contender, and Ronald Reagan, an undeclared candidate, are scheduled to address the group today. The group claims membership of 600,000 businesses.

At the end of his 35-minute speech, interrupted 16 times by applause, Connally asked for quesions from the audience. One man asked Connally what he would do about welfare. The Texan replied that no one wants to deny support for the handicapped or dependent children, a suggestion for which Ullman was booed.

But the public "should not support the indolent, lazy, trifling and those who cheat on the welfare program." Cheers erupted again. Connally, his voice rising and falling with the sway of the crowd, said government interference has forced many business people to abandon their retirement plans.

"Social Security was a good and valuable advance when it was first instituted," Connally told the crowd, which booed Ullman for supporting some form of Social Security.

Connally omitted from his speech a phrase in his written remarks that Social Security "remains good today."

"In the 1980s I believe that there must be a comprehensive overhaul of the Social Security system so that its promises . . ." Connally was interrupted by applause. "Its promises do not prove hollow and so that the burdens of supporting it do not prove mortal to the labor-intensive small firms."

When pressed by reporters later how he would reform social Security, Connally said he did not know.

On the subjects of energy and illegal aliens, which the small business members asked about, Conally suggested the formation of a North American common market to allow the United States to buy oil from Mexico. America should have made a 25-year contract with Mexico long ago to purchase oil, Connally said. America should also help Mexico get back on its feet economically and with their help solve the alien problem.

Connally then described an elaborate program of green and orange cards in which the aliens would work here in the United States in shifts for short periods of time so that only half the usual number of illegal entrants would be here. The aliens would also have to register within two years of entering the United States. If they didn't register, they would be deported, Connally said. CAPTION: Pictures 1, 2, and 3, Rep. Jack Kemp (left), Rep. Al Ullman (center) and John Conally address a meeting of the National Federation of Independent Business here yesterday: the audience shifted from boos and badgering to whoops, hollers and foot stamping. By Larry Morris - The Washington Post