"If only we hadn't lost that war!" my hostess said, pouring coffee. We were looking down at the rooftops of Siena on a bright fall day. The colors flashed from tawny gold to burnt sienna. The lady was complaining about having to change at Florence every time she wanted to go to France by train.

Siena, one of Tuscany's ancient hilltop cities, is on a branch line. The war she was talking about ended 429 years ago. If Florence had lost in 1555, Siena would have been on the mainline.

Her remark furnished an insight into this amazing medieval city where sophisticated, space-age people happily jump into suits of armor and back-gammon-board body stockings at certain times of the year.

For centuries, Siena struggled for power over Tuscany with Florence, which became the cradle of the Renaissance." And who knows? Had Siena won, under its leadership the form of Europe's rebirth after the long sleep of the Middle Ages might have been different.

Despite its historic loss, Siena is far from being a provincial backwater. The best Italian is spoken here. The Sienese have been successful bankers for about 700 years, and under a Communist-dominated administration they continue to be so. There are only about 65,000 of them, but the young are very good-looking and age sits well on the old. They eat and drink a good deal better than well. They suffer from no discernible sense of provincial inferiority.

Siena is known for its breathtaking Gothic cathedrals and for its historically significant art. But the old city is itself a remarkable artwork. It is a bustling maze of narrow, crowded streets winding uphill and down past fashionable boutiques and neighborhood shops. Many occupy the ground floor of grand palaces from the past, still astonishingly lovely. Vehicular traffic is sharply limited, but pedestrians sometimes have to duck into doorways to let a truck pass.

The city's central piazza, II Campo, is justifiably regarded as one of Europe's finest. Enclosed by a ringe of palaces, the piazza has the shape of an amphitheater or a scalloped shell. Like an amphitheater, it slopes; and like a shell, the pavement is elegantly scalloped. Steps lead through archways under the palaces to the broad interior and several sidewalk cafes. It is as pleasant a space to rest -- several times a day -- as you will find in any city.

But to understand Siena is to understand the city's world-famous palio -- a kind of medieval horse race, run twice a year, in July and August. The races take place in II Campo, and blazes with the color of late medieval costumes and flags, and the sound of trumpets and drums. (Will men and horse ever dress like that again?)

The horses represent contrade, or wards, of the city and are traditionally ridden bareback. The wards, geographic divisions within the walls of the old city, have totemic names like Unicorn and Snail and Panther and Goose. There is a certain clan-like loyalty among residents of the wards, and rivalry is fierce, just short of murderous. The palio seems to be a marvelous, radiant extravaganza, staged chiefly for tourists, but this is not true. It is staged for the Sienese themselves and would be run if there were not a single tourist around.

Not long ago I spent several days touring the wards, essentially little-differing neighborhoods but with a pride of locality, like Americans who identify themselves as Texans or New Yorkers. Like Siena itself, the wards display a judicious mixture of sophistication and visceral social instinct. (They take care of the young and the old, for example, as part of their terriotiral prerogative.)

For the few days I was in Siena this time (I live barely 40 miles away on the other side of the Val di Chiana; near Arezzo), I stayed in the Pensione Palazzo Ravizza -- a place of a certain distinction. Among the clients, the women disdain makeup, tend to wear watching sweaters and even pearls; the med avoid aggressive, digital watches. The prices are reasonable, but nobody mentions money. The food is tolerably good, and healthy.

The first contrada I visited was the Giraffe. I met the prior, Mario Tanganelli, in the Piazza Provezano Salvani. For the Sienese, the name Provenzano Salvani rings as loudly as George Washington does for Americans. He was the architect of the magnificent victory at Montaperti in 1260. Against the Florentines, naturally.

Tanganelli is a brisk, tweedy man whose home-team spirit extends right back to the Middle Ages. The contrade, he said, probably date back to the 14th century, perhaps even before the devastating year of the Black Death -- 1348 -- which drastically altered the political shape of these small republican cities. There are 17 wards in Siena at present, and they carefully count their enemies as well as their friends. Giraffe doesn't like Catepillar, but Unicorn does, though Unicorn and Giraffe are nodding acquaintances. Tower has been on very bad terms with Goose for a long time. At present Goose has no dealings with Caterpillar and Shell.

These complex relations have a more serious social purpose than the wards' names might suggest, I was told. Within each of the city's 17 wards people are hotly partisan, and protective. The old are cared for, the young have social centers and many organized activities. Children are even baptized into the wards -- little Giraffes are called giraffini.

Wards range from fewer than 1,000 members to many thousands. All are self-supporting. More than 60 percent of the entire population is enrolled in the contrade, and many of the rest are transients, such as students and teachers at the university.

Social classes exist but are largely overriden by membership in the contrade. Crime of all sorts is drastically reduced. There is no drug problem. Law and order goes literally without saying. If you have to say it, you don't have it.

While walking through Giraffe territory toward the posted perimeter of Unicorn (all territories are marked off), I mentioned to Tanganelli that the streets seemed remarkably clean. And the walls, as well. During my whole stay in Siena I saw only two graffiti, one political and one sexual. These would be immediately erased, I was assured.

As for being clean, my guide said that the narrow, hilly streets of Giraffe territory were terribly dirty. He pointed to a few papers lying about on the cobbles. Pretty shocking. He implied that tourists were responsible, as they probably were -- no Giraffe litters. However, tourists are treated with dignity and respect here. Like another wealthy medieval guild, fantastically costumed. During palio time they almost outnumber the local population.

In fact, Siena has been dealing with tourists for centuries, since Cesare Borgia and the Duke of Urbino used to drop in to check their palio horses. The Emperor John Paleologus of Byzantium showed up in the summer of 1432. A few popes came from time to time. To an outsider -- probably even to an emperor or a pope -- this riotous horse race in which the horse can win alone, shorn of his rider, seems total chaos.

However, as Lorenzo Bassi, the rather studious vice prior of Unicorn, assured me, this chaos is meticulously planned to resemble life itself. Every attempt is made to introduce the element of chance in the palio -- symbolizing a superior power, according to Bassi. Horses and positions are assigned by lot. Even competitors are partially decided by chance. (It is too dangerous to run all 17 contrade in the same race; therefore, some are held over for the next year and automatically guaranteed a place, while others are chosen to run by a drawing.)

The Unicorn official -- all offices are elective -- proudly showed me the contrada treasure room, bright with racks of medieval costumes weighed down on hangers by gold thread and precious stones. There were valuable paintings and furniture here also, some awaiting repair. These things represented continuity, as did the old brick walls of the headquarters, which glowed like cherished gold.

We visited the Unicorn social rooms, where Bassi poured me a vermouth at the bar and carefully paid for it out of his own pocket. All possessions are communal and all work is voluntary.

In the palio, Bassi said, along with chance, due consideration must be given to the human element. Man, he explained very seriously, will do almost anything to win a contest -- including many things that are wrong. This is called free will.

As a consequence, he said, man can do almost anything in the palio race to win -- including trying to knock riders off their horses and making many interesting deals concerning who wins and who loses. Man has also been known to slip horses various pick-me-ups and put-me-downs out of a pure spirit of "free will."

This hardly means that the palio contests are fixed. It would be hard to believe that 17 competing racing syndicates anywhere could fix any single race to everyone's satisfaction. Such a flurry of human activity amounts to unleashing blind chance again -- the superior power. So this may be the fairest race in Europe. Bet on the pretty colors. You might as well.

A former captain of the Panthers put me straight about a few other things going on in the contrade. Aurora Menchetti reminded me that in the 1851 palio a 14-year-old girl named Virginia came in second for Dragon. In Panther, too, it's not whether you're a man or woman that counts, it's whether you win races.

The greatest weakness of the contrada system, Menchetti said, is urban sprawl. Of Siena's 65,000 people, only about 15,000 actually live within the city walls. The wards that face into open land beyond the old city walls pull in the most new members. But they also have the greatest difficulty controlling them. Interior contrade recruit new members from outside also, but they are generally relatives of present or past members.

The far-left junta that runs the city leaves the contrade alone and does not try to enlist the contrade in support of its ideologies. Contrade make it a point to stay away from hot political issues and have done so since the days of fascism. Many of the young people nevertheless profess to be Marxists and draw away from church activities within the wards. But, come palio, they would fight to the death to have their horse blessed in church.

On feast days, the people of the wards set up tables and eat in the streets. On the night before a palio race, everyone is encouraged to sing rousing contrada songs, eat heartily and drink one bottle too many of heavy Sienese wine. Typical Sinese food is plain and very fresh, including game in season (the Chiana beefsteaks are superb).

Siena has a curious place in the art world. While its artistic heritage is acknowledged as one of the richest in Italy -- therefore in the West -- commentators often draw back from praising it unreservedly because it is a bit off the mainstream.

Tours of art galleries and churches usually have me wondering how soon we can break for lunch. But here in Siena, a large collection of art left me hungry for more of the same. And lunch could wait.

The Duomo (cathedral) in Siena is surely one of the finest extant examples of Italian Gothic. It is simply astonishing, soaring into the serene blue Tuscan sky in black and white splendor. The vapor trails of jets behind the spires don't clash at all. It's all wonderfully fanciful and deeply moving.

The paintings to be seen in Siena are often as stunning. Duccio comes straight out of the Byzantine traditional with astonishing force. His illustrations of the Gospels are vividly alive. Not lifelike -- alive. It's a world of the spirit, but immediate, individual.

Simone Martini, who came a bit later, can carry one into the reality of his time, and right out again. His Guidoriccio da Foligno is a fat captain on a fat horse who may or may not have paid to have his picture taken, as it were. Martini might have taken him seriously and was meticulous in his detail of an army camp -- but his brush follows its own fancy. And Ambrogio Lorenzetti. I think I've never seen a painter so subtle and original, while maintaining his own simple sense of humanity.

I have always stayed away from Siena during palio time because of the crowds, the noise and the lack of accommodations, assuming that this was a tourist trap. Now I know for certain that it is something more than that, for the Sienese take the palio much more seriously than they take tourism.