When DOc McConnell's Old Time Medicine Show hits the hollows of Eastern Tennessee's Smokey Mountains. Doc himself usually regates the small-town crowd with his Tale of the Walking Catfish, a finny renegade who traveled by land until he accidentally fell into a creek and drowned.

If the truth be known, there is no walking catfish. and Doc is Ernest R. McConnell, a high-school custodian from Rogersville. Tenn., who like to hitch up a homemade wagon to the back of his car and peddle home remedies and tall tales across the South.

But then like everything else these days the truth gets stretched some in the story-telling business. Among the creatures peopling the fifth Annual National Storytelling Festival held in this little community of 1,700 believers this weekend were two-headed giants, talking bears and ubiquitious bumpkin named Jack, who never lost a battle of wits with a city sticker or a king.

"I beleive my stories." said McConnell. who, in reeling off a yarn like the Saga of the Frozen Smoke. turns into a full cast of characters before the eyes of his audience. "Stories happens to me when I tell them and I want the people who hear them to believe they are happening to them too."

In an age when one-liners a-la Johnny Carson dominate most conversation and some people spent most time in front of the television than they do in bed, it might be thought that the art of spinning a rambling, long-winded story in the flesh would be on the wane.

But the 18 professional storytellers and the hundreds of amateurs and fans who turned up here for the festival beleive otherwise. They happily gathered in the church basements and in the darkness of the local repertory theater. with rain spattering on the most unending round of stories.

When the rain fell on the Jonesboro Cemetery Saturday night no one in the crowd gathered there moved while Alabama ghost-story specialist Kathryn Windham told the tale of the Southern Baptist Church and the barrel of sins that came rolling down the aisle one Sunday morning.

The South is probably the best place for storytelling," said Windham, a 59 year-old author who has published five books of Southern ghost stories. Her tales are peppered with the small details gleamed as a newspaper reporter over a span of 40 years.

"The great tale-tellers have come out of the South." she said. "Southerns have always takens the time to tell a story. Tale-telling can't be hurried. You need time to sit for awhile and tell a story."

The Joneboro festival is the work of 30-year-old restaurant owner here named Jimmy Neal Smith. Smith began the festival with four storytellers who gathered in 1973 and recited tales to a hanful of listeners from the bed of a farm wagon parked alongside the courthouse here, where Andrew Jack son began his law prictice.

Jackson, who practed here for a year before moving on, is the source of much of the local storytelling in Jonesboro. On one occasion, said Smith, Jackson and another local attorney named Waigntstill Mary became so incensed during their courthouse arguments that they challenged each other to a duel. When the appointed hour arrived the next morning. both men. their tempers considerably cooler, upheld their honor by agreeing to march apart and then whirling and tiring into air over each other's heads.

Since the storytelling festival's beginning storytellers from as far away as Utah and Texas have showed up fpr the annual gathering. This year, Marshall Dedge, a specialist in New England folklore, came from Maine.

Smith and other six other professional storyteliers formed the National Association for the Preservation and Perpetuation of Storytelling last year. The organization, which is currently housed over a laundromat on Jonesboro's main street, raised early $85,000 in federal and state money to run this year's festival and begin what they hope will be the country's best collection of recorded and printed folk stories.

The Jonesboro festival organizers have also started two other similar annual gatherings in Louisville and at Cumberland Gap, Tenn.

Southern storytelling goes back a long way, with blacks and whites. White storytellers, particulary those who inhabited the Smokies of Eastern Tennessee and Western North Carolina, have spent generations passing down what are called "Jack Tales."

The stories almost always involve a slowtaking Southern farmer who manages to outwit the outsider. They probably began with the English immigrants who moved into the Southern mountains before the Civil War. They were spread by Council Harmon, a North Carolinian who lived through much of the 19th century around Beech Mountain, N.C., and who was partiarch of a widespread clan of storytellers.

Richard Chase, a 73-year-old itinerant storyteller who showed up here several weeks ago in a black traveling van after a dozen years in California, is perhaps the world's authority on the Jack Tale. Chase, who has written several books on the subject, described them as having spread far beyond the Southern Mountain.

"There is a Jacques who shows up in stories told down in New Orleans, and in Wisconsin he's Swedish." Chase said. "He's always the same kind of character. There are no Watergate apartments in this type of folklore."

Among black storytellers, probably the most widely tepeated tales are those of Uncle Remus. Jackie Torrence, a 33-year-old black professional storyteller from High Point, N.C., said the Remus stories originated in Africa but were transformed by slave storytellers in the American South to poke fun at their masters.

"Brer Rabbit started out as a spider in Africa but the slave storytellers changed him into a quick, smart rabbit," she said. "In their eyes he was a slave and the big ugly bear whom he feared was the slave-master. In the tales, the rabbit always outwits the bear."

As Chase Torrence aid, there is a close relationship between Brer Rabbit and the white story teller's jacques. "The trickster is the universal among storytellers."