GLEN ECHO PARK is dying. Scene of the National Chautaqua in 1891, then a famous amusement park, and now a National Park Service-run center for the participatory arts, the park is at a turning point. Programs for the summer have been trimmed, park buildings are deteriorating rapidly, and the future looks bleak for small urban parks under Ronald Reagan's budget.

"We might have to put a lock on the gate and mothball" Glen Echo, says George Berklacy of the Park Service.

But in an era of rising demand for nearby recreation because of inflation and the energy squeeze, park officials can do better than mothballs. They should look to private dollars as a possible way to close the growing gap between demand and what the public dollar can provide.

"The government is like the threadbare dowager from a once-rich family," points out Arthur J. Phelan, a former savings and loan executive who serves as a director of the Montgomery County Arts Council. "She has what once had been stately assets, but now she doesn't have any money to do anything with them. She better make the best deal that she can soon."

With skill and imagination, this place of extraordinary, but largely untapped, potential on the Potomac Palisades in Maryland could come alive again and serve as a model for recycling other underused urban parks around the country. Government partnerships with commercially resourceful people who respect esthetic values can provide an antidote to budget cuts for the arts and humanities.

The Park Service would have to insist that any commerical development preserve the historic integrity, eclectic architecture, and essential character of the park as a place for family educational and cultural activites. It should not become a Disneyland on the Potomac.

The park is a monument to the way the nation amused itself during much of the last century. From the stimulating 1891 Chautauqua (a summer lecture and culture series that was ubiquitous entertainment in America in the late 1800s); to the booming amusement park of the '20s, '30s and '40s; to the participatory arts that have blossomed there recently, the park's uses have shifted to reflect the changing entertainment needs and interests of the Washington community.

No reliable costs are available pending a structural survey now underway by the Park Service, but former savings and loan executive Phelan says that a developer with government cooperation and $1 million could make a good start on reviving the park and establishing a successful commercial venture.

It is important for the park's rejuvenation to evolve according to the needs and desires of its users. A complete master plan would be premature, but the development might include some of the following elements:

Restore the ballroom. The Spanish Ballroom, one of Washington's premier attractions during the big-band era, has fallen on hard times. Defaced during an incarnation as Jungleland and now boarded up and dotted with "no trespassing" signs, the once palatial 1933 open-air ballroom is decaying and seldom used. The marvelous rock maple floor where 1,800 dancers once jitterbugged and fox-trotted remains, but the Park Service has axed the regular Saturday night dances.

The ballroom will celebrate its 50th birthday in 1983, and what oculd be a better present than a top-to-bottom facelift? The building's arches could be open once again in summer and the building winterized for use during the rest of the year. In addition to providng a place for dancing for the non-disco set, the 8,000-square-foot ballroom and stage could be rented for civic and corporate receptions, antique and craft shows, and community and theater performances.

Add a cafe. In order to survive, Glen Echo needs a commercial anchor. A modest-sized cafe could be added to the north side of the ballroom for a few hundred thousand dollars. A deck extending from the ballroom would provide a picturesque view of the C&O Canal below. Done in a style compatible with the ballroom and decorated with maps, photographs, and artifacts from both the Chautauqua and amusement park periods, the cafe could offer a relaxed, old-fashioned atmosphere. It would be a perfect setting for local folk and jazz musicians, and, according to resident potter Jeff Kirk, " a gathering place that the park does not now have for resident artists and students to talk and exchange ideas."

Establish a museum. Former Rep. Gilbert Gude (R-Md.) helped lead the battle in the late 1960s to save the park from the high-rise development and later to ensure transfer of ownership of the park's 16.8 acres to the Park Service. Gude hopes that Glen Echo eventually will be the site of a museum to commemorate the significant contribution that the Chauauqua movement made to out national culture. The 1891 Glen Echo Chautauqua was part of a national educational movement that combined that attractions of a summer resort with the intellectual stimulation of a university during a period when many people were trying to reconcile the troubling differences between religion and science. The Victorian tower, now used for gallery space, would be the logical choice to house the museum that could incude a slide show telling the story of the Chatauqua and the amusement park and scale models of the park in its heydays of 1891 and 1941.

Covert the pool into a theater. Built in 1931 to hold 3,000, the Crystal Pool now hangs precariously over the George Washington Memorial Parkway and sits empty except for an occasional weed. Many believe that pool is incompatiable with a culture park, but what does one do with a 5,500-square-foot white elephant? One alternative would be to take advantage of the excavation work already done, shore up the shaky walls, and construct a modest theater with several hundred seats. It could play host to a revival of the Chautauqua lecture series tradition, community theatre and dance groups, and old-time movies.

Expand studio space. Existing studio space could be renovated and expanded to meet the demand for low-rent space for artists. The Torpedo Factory, Alexandria's highly successful and self-sustaining art center, houses 220 artists in 96 studios at modest rents. "I don't see the bottom of the artists' well yet," says Torpedo Factory director Marge Alderson. And with multiyear leases, the artists would be willing to contribute money and sweat equity to the renovations.

The resident artists and their students would not form a base adequate to draw the capital necessary to restore the park's dilapidated, energy-efficent buildings. In addition to a resturant, shops to sell art supplies, books, crafts, and antiques would seem compatible with the Chautauqua spirit. The arcade, once home of the popcorn stand and the shooting galleries, classes, and conferences. An art school, summer camp, program for senior citizens, or community recycyling program could find homes at Glen Echo. Cable television is coming to Montgomery County, and the now-rotten "Laff" house could be turned into an arts access studio, according to Viacom Cablevision's Peter Grunwald.

Make the park more inviting. The fortress-style configuration of buildings does not entice the passerby to stop and visit. The back of the arcade is an eyesore to drivers and bikers on winding MacArthur Boulevard. The stunning stone tower at the curve in the road should be highlighted and the area behind the arcade spruced up. The large, dreary parking lot is almost equally unappealling. But Glen Echo Town Council member Nancy Long wants to reopen Minnihaha Creek, which now flows through a narrow culvert under the southern end of the parking lot and down to the river. An attractive bridge over the creek and some tasteful landscaping would create a most inviting point of entry.

Richard Cook of Gaithersburg, an electronics engineer who has made himself the park's unofficial historian, wants to reconstruct the Chautauqua period stone caretaker's building that sits at the base of the the parking lot. This decrepit building was once 2 1/2 stories but is now a one-story storage facility. It could be made into a visitor's center with information about goings-on at Glen Echo and how to find the resident artists who are scattered in mouseholes all over the park.

Leave open space. "Glen Echo is a users place," says Richard Ring, a Park Service official who used to be the site manager at Glen Echo. "It is a place for people to be active in their own style." Open areas behind the potter's kiln and at the remains of the miniature golf course should be left open for picnics, play areas for children, and room for spontaneous fun. The bumper car pavilion and "Cuddle Up" are reminders of the amusement park's pop culture that should be maintained. So should the park's tree-covered central courtyard, as a shady spot for informal performances and get-togethers.

Bring back the trolley. Beginning in 1891 and continuing until 1961, visitors to Glen Echo used the trolley. Paul Skrabut, a congressional staffer who lives in Cabin John, wants to bring the trolley back both for recreational and commuter purposes and tie it into the Foggy Bottom Metro station. The trolley right-of-way and the trestles over Minnihaha Creek and elsewhere remain. A less ambitious idea would be to reopen a one-mile-plus stretch of tracks between the Cabin John Bridge and the Sycamore Store to link Glen Echo with two nearby access points to the C&O Canal. The Trolley Museum in Wheaton has 14 cars dating from 1898 to 1939 and should be willing to lend one or two to Glen Echo.

A tasteful commercial development of Glen Echo Park could provide area citizens with an attractive site for relaxed family recreation and cultural stimulation and built in the Chautauqua image. Local artists and performers would have a place to sharpen their skills and be seen by others. The Park Service would have desperately needed improvements made to its buildings that it cannot now afford. And Montgomery County would have a vibrant facility generating new tax revenue.

The government does not have the money to rejuvenate Glen yecho, but it need not be put in mothballs. By giving sensitive and resourceful private-sector people an opportunity to realize the park's full potential, the Park Service would serve the public interest and possibly establish a model for recycling underused or abandoned park facilities across the country. Otherwise, the 100th anniversary of the Chautauqua in 1991 is likely to be grim indeed. As Jim Sanborn, a sculptor who has spent seven years in residence at Glen Echo, laments, "It would be easy for the Park Service to make Glen Echo just a picnic area for people to visit who want to look at the ruins of an old amusement park."