In December 1940, civil rights activist Clarence Mitchell Jr. sat in his office and penned a letter to his year-old son, Clarence III: "From your earliest hours with us you have shown yourself to be a child of great possibilities. You bear the stamp of heaven's approval in your manner and on your face. We are humbly grateful that you are part of our household and carrying our name."

Today, more than 45 years later, state Sen. Clarence M. Mitchell III hopes to carry his father's name to Congress, just as he has to meetings with presidents, senators and international figures and to his constituents on the streets of West Baltimore.

But there are problems looming for the longest-serving black politician in the state, a man who inherited the mantle of one of Maryland's great political dynasties when his father died in 1984. Mitchell's alleged business relationship with one of the city's leading narcotics dealers now is threatening to tarnish the legacy of a family that Clarence III himself has called the "black Kennedys" of Maryland.

The Washington Post reported last week that Mitchell, a Democrat who is expected to announce his candidacy next week for the 7th Congressional District seat being vacated by his uncle, Rep. Parren J. Mitchell, is under investigation for possible perjury and obstruction of justice. Sources close to the probe said that investigators are focusing on whether Mitchell arranged fabrication of financial documents to support allegedly false testimony he gave to a federal grand jury last May. The grand jury was looking into whether Mitchell has financial ties to convicted heroin dealer Melvin D. (Little Melvin) Williams, the subject of a wider narcotics investigation.

Mitchell's current predicament, the subject of speculation and rumor in Baltimore political and legal circles for nearly a year, is potentially the most serious crisis of his career. Political observers here say the outcome of the criminal investigation could not only jeopardize his first bid for federal office but also stain the Mitchell family's virtually unblemished record of civic accomplishment.

"If he wins, he wins on the Mitchell name, not because folk are dying for him to run," said the Rev. Walter Thomas, president of the city's influential Baptist Ministers' Conference.

Mitchell has survived other legal scrapes. He has been charged with housing code violations, failing to file income tax returns and carrying a .38-caliber pistol in his carry-on luggage at Baltimore-Washington International Airport. As for the current investigation, he said he has done nothing wrong and will be vindicated.

He said he was targeted because of his outspokenness and pursued by law enforcement officials because he championed activist causes. "In 24 years in the legislature, I've been under investigation 16 times," he said in an interview last week. "Whatever files the government has on me began when I was 18 or 19 years old and working with SNCC," the Student Nonviolent Coordinating Committee.

His legal problems, he said, tend to "occur during Republican administrations . . . that are not sensitive to black progress."

He referred all questions about the current investigation to his attorney, but told a reporter: "At some point the real story is going to have to come out, which is going to be a lot bigger than the story you think you are pursuing."

The oldest of four brothers, Mitchell was raised in a Druid Hill Avenue row house in a largely poor and black West Baltimore neighborhood. It was during those years that he got to know some of the people with whom his name has become linked during the grand jury investigation. "You grow up with people," he said, explaining why he is still acquainted with several childhood friends who now have criminal records. "You don't stop talking to people."

But from birth, it was clear that more was expected of a Mitchell. "I hung with them on the street corner, but when they started talking about breaking into somebody's home or into a store, I would go home," he recalled. "Not because I was afraid of the police, but because I was afraid of my father."

His father was called the "101st senator" on Capitol Hill, a tribute to his effectiveness pushing landmark civil rights legislation during 29 years as Washington lobbyist for the NAACP. His mother Juanita, now 73, was the first black woman to graduate from the University of Maryland's law school, which initially barred her from entering because of her race. She ran a neighborhood law practice and, like her mother, Lillie May Carroll Jackson, was active in civil rights protests.

"At 12 years old I had met the president of the United States," Mitchell said. "My vision was a lot higher than my friends'. I had visited with Harry Truman. Mrs. Roosevelt had come to my house."

After attending crowded public elementary and junior high schools, Mitchell was sent to Washington to attend Gonzaga College High School, a rigorous school run by the Jesuits. He spent three years at the University of Maryland and Morgan State University but never received his degree. According to Mitchell, he left Morgan, where he had led student sit-ins, "to become a freedom fighter."

His parents wanted him to finish college and become a doctor. They were not enthusiastic when he was asked to join state Sen. Verda Welcome's ticket in the legislative races in 1961. But the Mitchells threw their weight and their name behind him in his first race for the House of Delegates.

"Certainly the family name was beneficial," Mitchell said. "But my family was always involved in nonpartisan civil rights activity. I was the first one involved in partisan politics."

He was the youngest black legislator in the country when he went to the State House. "When he came out I thought he was going to be the savior of the black race," said City Council President Clarence H. Du Burns, the dean of black politicians in the rival political organization on Baltimore's east side. "He was 22 or 23 years old and he took on the world.

"Nobody can fill that man's footsteps," Burns said of Mitchell's father. "The name is magic, though."

Last year, when rumors about Mitchell's alleged ties to Williams began to percolate, the state senator was honored at a special testimonial to his career in public office. He received congratulations and acknowledgements from the governor, two U.S. senators, three congressmen and officials from the National Caucus of Black State Legislators, over which he presides.

"Like other members of his distinguished family, Sen. Mitchell has gained a reputation as a fighter for the underdog and as a voice of compassion," said a message from Gov. Harry Hughes.

A glossy magazine, published for the event and distributed to his supporters, chronicled Mitchell's accomplishments on page after page of photographs: young Clarence with Truman; the nation's youngest black state legislator with John F. Kennedy; the mature politician with Jimmy Carter, Ronald Reagan and Jesse Jackson.

And there was a picture of Mitchell and his father, with the caption: "Like father, like son."

What the glossy journal could not document was how Mitchell's problems might, over time, affect the family legacy.

When reports of the current investigation were first published in The Baltimore Sun in March -- nine months after the celebration of Mitchell's legislative career -- Mitchell rose to the floor of the Maryland Senate to defend himself against the charges that he was allegedly tied to Williams. His colleagues sat silent. Today, some of his own constituents are reluctant to speak in his behalf.

Now Mitchell is counting on his traditional supporters to help him transcend the negative publicity that he said is unfairly being thrust upon him.

"People have come to perceive that I have been consistently under attack the whole time I have been in public office," he said.

Del. Howard P. Rawlings, a Democrat whose West Baltimore district lies north of Mitchell's and includes some of the city's affluent black neighborhoods, said that it would take more than rumors of wrongdoing to defeat Mitchell.

"I think generally black people don't take away their affection unless something very devastating happens," he said.

Yet even in his own community, the Mitchell dynasty's power base for decades, Mitchell now has detractors who no longer automatically accept him as the popular figure his father was. Several of Mitchell's strongest critics do not want their names attached to their comments, they said, because they have other ties to the family.

"People just don't think he is serious, that he has assumed the responsibility that the name carries," said a West Baltimore lawyer who is active in politics.

Former state senator Welcome, who recruited the young Mitchell into politics in 1961, said she wrote him two letters while they were both serving in Annapolis expressing her disappointment in him.

"I consider myself his political godmother," said Welcome, who was defeated in a 1982 reelection bid. "With the opportunities he's had, that's why he's a disappointment. But he's no worse than a lot of people who get away with things."

For years, Mitchell has been expected to make the leap from Annapolis to Washington, leaving room in the legislature for his brother, City Council member Michael Mitchell, and later for his son, Clarence IV. Some observers here said the congressional race is a test of the durability of the Mitchell family name, which has had to endure a string of embarrassments stemming from Clarence III's legal problems in the last 15 years.

"He will get some mileage off the Mitchell name, but not enough to make the difference," said Del. Wendell Phillips, who is running against Mitchell in the Democratic primary.

"To defeat Clarence would be a significant task," said City Council member Kweisi Mfume, who is also running for the 7th District seat. "I don't want people to think I'm running against Clarence because, in a sense, you're running against a dynasty, a legend."

Parren Mitchell, whose retirement from Congress this year leaves Clarence III as the highest ranking Mitchell in Maryland politics, has stayed aloof from the campaign for his seat but said in an interview last week that he will endorse his nephew once he announces.

Mitchell is expected to announce his candidacy Monday, on the steps of Baltimore's city courthouse -- named for his father.