Richard Layton grew up here where the Delaware Bay meets the Atlantic, but in order to find work the unemployed welder is leaving his hometown for the coalfields of Pennsylvania. Henry Sabathne, on the other hand, grew up near the coal trains and tipples of Altoona, Pa., and came here in retirement to get away from it all.

The two men symbolize the dilemma facing this historic seaside community of quaint houses and windswept beaches. The "first town of the first state," which just commemorated its 350th birthday, is at a crossroads. Once a bustling working town of commercial fishermen and factory workers, Lewes has turned quiet -- so quiet that younger year-round residents increasingly must go elsewhere to find full-time work.

Now, a proposal to build a coal port on a choice, abandoned tract of land has brought the thorny problem into sharp focus: The prospect of 200 coal cars rumbling through town every day holds open the promise of jobs for the natives but also the threat of dust and disruption for the newcomers and summer folk who flock here for relief from the dirt and congestion of the city.

The promise may be illusory and the threat overstated, as some on both sides say, but the conflict is real. It has been building in Lewes ever since this summer, when residents learned that Annapolis entrepreneur T. Phillip Dunn intended to develop a coal port that would receive from 3 million to 6.7 million tons of coal a year and then barge it to supertankers anchored off shore. The big ships would use the facility to "top off" loads obtained at other ports.

Dunn describes his facility as "very small, almost hip pocket," compared with ports such as Baltimore and Hampton Roads that handle 30 million to 40 million tons a year.

In a bid to win local support, Dunn has promised a seafood-processing plant and a marine supply and repair business on the site of his development. To finance these other enterprises, he said, he needs a coal port.

"We've tried to communicate with the local people," Dunn said in an interview at his Annapolis office. "They're petrified, terrified by rumors, falsehoods, myths, old wives' tales about the coal industry. Coal does not have to be handled as a dirty, filthy project. Our biggest obstacle is the fact people think we're trying to build or develop a monster."

"There's so much rhetoric, I really don't know which side is right," said Jim Monihan, assistant administrator of Beebe Hospital, Lewes' largest employer. "The area needs industry. It's fine to retire here and say keep it as it is, but people can't eat that. It's kind of a 'Catch-22' situation."

Offering what local real estate agent Rush Ellis calls "a beach atmosphere without all the hustle and bustle" and higher prices of Rehoboth and Bethany Beach to the south, Lewes has lured vacationers and retirees from Washington, Baltimore and other metropolitan areas, tripling the summertime census in recent years. Local property values have rapidly appreciated.

At the same time, the full-time population has dropped sharply, by as much as 28 percent, from 3,025 to 2,167 in the last decade. Lewes' school enrollment has declined 22 percent in the last five years alone. The town is either dying or doing nicely, depending on your point of view.

Ed Kingman likes it the way it is. A retired Navy captain and banker, Kingman lives with his wife in Pilot Point, a condominium development near the proposed coal port. "At the moment, Lewes is a quiet town that doesn't want to enlarge," asserted Kingman, who moved here a decade ago from Arlington.

Last week, Lewes was not only quiet but also bleak and windy, as winter set in with temperatures below freezing and even the threat of snow. The beachfront cottages and condominiums were mostly empty, giving the streets near the water an almost ghost-town look.

The town proper, set back from the water, was quiet, too. Stores had few patrons. Foodlane was preparing to close for good Dec. 30, leaving Lewes with only one supermarket and adding five more residents to the ranks of the local unemployed.

The railroad tracks through Lewes cut across the town, bisecting the three main roads that lead to the hospital, the business district, the beaches and the ferry to Cape May, N.J. Since the two menhaden fish plants closed in the l960s, the tracks are seldom used, with only an infrequent train slowly passing through to a plant where they make Maalox to soothe the upset stomaches caused by fast-lane stress, by all accounts an alien ailment here.

Along Railroad Avenue and other streets adjoining the tracks, the new people have come to restore old houses and inhabit new homes. Henry Sabathne's house in Sand Dune Village is a mere 63.5 feet from the railroad. Gus Elias, a New York City sculptor, owns property even closer and wants to move his business here. But, Elias wrote to Al Stango, the gas-pumping mayor of Lewes who is originally from Washington, "If the coal port is allowed to go through, we're not moving to Lewes, despite how idyllic it now is. We'll just have to treat the land and building we bought as an investment of dubious merit."

That would be just fine with Naomi Warner, an unabashedly pro-coal port member of the City Council. She came here in the l940s, from Mahanoy City, Pa., to teach math at the high school. Back then, Lewes had stocking factories and fish and chicken-processing plants "going full steam," she recalled. "We had our share of pollution but we had our industry. This neighborhood used to be wild with kids. Now, it's becoming a community of senior citizens."

And tourists. "I don't think the coal will cause half the pollution of tourist traffic," she said. "What it might drive off are the summer residents and retirees, but it would keep the younger people here. A lot of other industries could grow out of it, maybe another hardware store or machine shop, but not another antique shop or boutique or other tax write-off."

The Lewes Chamber of Commerce is split on the coal port proposal, and a new group, the Lewes Merchants Association, has sprung up to oppose the plan but also to encourage Dunn to bring other more acceptable enterprises to town.

"Merchants like myself feel anything that takes the town away from the direction of developing into an arts and antiques center is bad," said Jack Foreman, a member of the association and owner of one of the town's five antique shops.

The coal port plan has also sparked the creation of the Concerned Citizens for Our Seacoast Future, whose president is Dale Parsons, a fishing charter boat captain who is building a lighthouse-shaped restaurant on the Lewes Canal. "You're either going to be an industrial port or a resort area," said Parsons. "You can't hardly have both, because they're not compatible, to my notion. We're not anti-Dunn. I like the man. We just don't want to see a coal port."

Dunn, many of his critics concede, is tough to dislike. A native of North Carolina, he speaks softly and is given to crew-neck sweaters and button-down shirts. The former airline pilot who went into real estate five years ago has been engaged in a variety of ventures from a condominium conversion to a new hotel in Annapolis.

But on the coal port, his first industrial project, he ran into trouble. Neither his presentation nor his promises have swayed a sizeable segment of Lewes -- and not all of them newcomers -- worried about noise, traffic, air and water pollution, real estate values and tourism.

In his first meeting with local officials after he acquired 16 acres and an option on an adjoining 63.5 more last January, Dunn made no mention of coal. "We were interested to see the city's reaction to a bulk product facility before we made any decision one way or another," he said. "Nobody is trying to deceive or buffalo anybody. You make business decisions as you go along." But some citizens felt they had been misled.

Dunn fared no better at a hearing in October, which drew a crowd of 300 persons, most of them opposed to the project. No other local hearing had drawn such a crowd, but, by all accounts, very few of those in attendance in October were strictly local. They came, in fact, from as far away as Greenwich, Conn., and New York City to voice their angry opposition. The only natives to speak favored the coal port.

According to Bob Hall, the pro-coal port town barber who stayed home from the hearing, few natives attended the session because Lewestonians are simply not vocal by nature. "If you say too much, the first thing you're a radical," Hall explained.

In his quest for local support, Dunn invited the mayor and City Council to fly, at his expense, to Morehead City, N.C., to inspect a coal port the developer described as similar to what he has in mind. The mayor, who opposes the coal port, declined to go, and the three council members who made the trip disagreed on what they saw.

A scientist from the University of Delaware's College of Marine Studies, which is located here, and the editor of the Lewes Whale, a weekly newspaper, went on their own and were not impressed with the North Carolina operation. University officials believe a coal port will drive away professionals they hope to attract to live in Lewes and work in a marine research park they plan to build here.

At present the coal port battle is being fought at the state level, because the use of Dunn's property is governed by a strict Delaware coastal zone development law. He requested a ruling on whether his proposal fit the law's requirements and received an answer from the state so ambiguous that both he and the opponents of the coal port plan appealed it.

The other week an appeals board upheld the original ruling. Both sides claimed the decision as a victory, but not a final one. Dunn is preparing to submit a more detailed plan for approval. His opponents, including a group of Lewes condominium owners represented by a former chief of staff to Delaware Gov. Pierre Dupont, are poised to continue the battle.

In Lewes, the debate goes on. "It's a disaster for Lewes," said antique dealer Foreman when asked about the coal port. He reflected a moment, then added, "The young people are all leaving. They need something. It's a dilemma, and if I had to make the decision, I'm not sure . . . . "