Twenty-six years ago Hollywood made a movie called "Captive City" about a group of gangsters who take over a well-mannered, complacent town and turn it into a haven for the mob. It ends with John Forsythe, the good guy, running for Washington and the sanctuary of the Kefauver Crime Committee.

"Captive City" was made in Reno. It was chosen, as director Robert Wise remembers it, because Reno had the look and quality of a small Midwestern town with a good supply of bit actors from the local university and little theater.

It was your basic mixed-review movie, soon destined for the late show, but it was a big hit in Reno because it confirmed what those who lived here thought about themselves.

No one took the plot seriously - gangland killings, after all, were what went on in Las Vegas - but it was comforting to know that Reno, if the cameras avoided the mountains, had a Midwestern look about it.

After all, many people in Reno were descended from Midwestern settlers who had trekked across the Great Plains in search of silver, gold and the good life.

The permanent population of Reno, all 41,000, thought of Reno as a superior place and did not accept the outside view that Reno was merely a convenient stopover for easy divorce and gambling, then carefully redlined into a small downtown area that was almost all visitors ever saw.

Apart from this flourishing, neon-lit district, which was the gambling center of the United States before Las Vegas and air-conditioning arrived virtually simultaneosly, Reno was a city of culture, churches, outdoor sports and pleasant climate. The downtown bridge from which all well-publicized divorces threw their wedding rings traversed the clear-flowing Truckee River, which was a haven for rainbow trout and sometimes the brightly colored native trout known as the cut-throat.

Best of all, the early settlers who had survived the shadeless heat of the Great Basin were tree-worshippers and had covered the city with strands of elm and cottonwood that rustled in the frequent wind. Walter Van Tillburg Clark, who wrote the acclaimed novella "The Ox-bow Incident," put his second novel in a Reno detting. He called it "The City of Trembling Leaves," which the townpeople found a most agreeable image. They valued their trees and they valued, too, the gigantic freight trains which roared through Reno day and night, their whistles heard throughout the valley.

"Thus Reno is reminded constantly, wrote Clark, "that it is only one small stop on the road of the human world, that it trembles with the comings and goings of that world, and yet that the greatest cry of the world is only a brief echo against the mountains.%

That idyll is gone now. It was destroyed in a twinkling, because the reality of the redlined downtown turned out to be the greatest cry of the city's world. Reno did not know what to do about all this. It always had pretended that the casinos were a place outside the rest of town, living their own life, rather than the economic base of Reno's existence.

But as Las Vegas grew into the pleasure palace of the western world and the Reno economy slumped, the economic reality became glumly apparent to the contractors, building and trade unions, businessmen and real estate operators of the northern Nevada city.

One day the owner of the oldtime casino known as the Palace Club received a phone call from an old friend at the MGM Grand Hotel in Las Vegas. The old friend asked that a private meeting be set up for the Reno City Council.

It was held in the private dining room of the Palace Club and was kept secret at the time. Out of this meeting grew a marvelous Las Vegas-like deal in which the Reno City Council obligingly gave MGM what it wanted - zoning and land for a gargantuan new casino-hotel. Soon, the world's largest casino, accompanied by a 26-story hotel, rose on a site which had once housed the city's animal shelter.

The MGM Grand Hotel-Reno is only the beginning. By the fall of this year, 10 other casino-hotels will have opened or expanded in Reno, more than doubling the city's casino floor space to 910,000 square feet. The population of Reno and the surrounding area, known collectively as the Truckee Meadows, is expected to rise 10 percent annually to 250,000 by the mid-1980s. Ultimately, the population is expected to reach 620,000.

All of this sounds much like the overgrowth that afflicted such disparate western communities as Los Angeles, Denver and San Jose. But Truckee Meadows, on oasis on the edge of a great western desert, had a far more vulnerable environment that these communities. The Truckee River is raging now, but last summer, in the third year of the drought, it was a dying trickle en route from one imperiled lake to another.

The environment of the atmosphere is even more fragile. Reno is surrounded by a rim of mountains more encompassing than those of Los Angeles, and it has a natural temperature inversion in the fall and winter.

As university physics professor Richard Sill, who has studied pollution problems on various unheeded blue-ribbon committees, put it; "At the 250,000 population mark, we'll have air-pollution problems equivalent to Los Angeles. At the 620,000 mark, the air-pollution will be as bad as Tokyo's or Sao Paulo, Brazil."

In "Captive City," the little Midwestern town that resembled Reno was saved from the mob by the intervention of Washington. Against terrors ultimately more pervasive than gangland violence, Washington also has been the bulwark of the real-life Reno.

In an effort to protect Truckee River water purity, the Environmental Protection Agency has refused to approve sewer expansion for the city. EPA officials also have warned that funds for highway expansion and other federally aided projects will be withheld unless the city does something about its prospective air pollution.

This federal prod has spurred a new, if reluctant, awareness in Reno that there may be finite limits on the city's growth. Recently, Planning Commissioner Don Richter resigned in a four-paragraph letter which contrasted the commission's finding that there is no need for additional hotel-casinos with its approval of a new 500-room casino known as Boomtown.

Richter denounces what he calls "government by accommodation" and predicts that candidates favoring limited growth will run strongly in city elections next year.

Maybe so. Maybe at the point when the trout are gone from the Truckee and the inversion-compressed smog hides the mountains for days at a time, Reno will react the way other cities have when they see the progress they have encouraged has destroyed their special reason for being.

By the time this happens, however, the fragile environment of this once attractive oasis is likely to be beyond any restoration. Some of the old-timers here believe that Reno already has crossed this point of no return.

For them, the entire city has become what the downtown ghetto of casinos once was to Walter Van Tillburg Clark - "The ersatz jungles, where the human animals, uneasy in the light, dart from cave to cave under steel and neon branches, where the voice of the croupier halloos in the secret glades, and high and far like light among the top leaves, gleam the names of lawyers and hair dressers on upstairs windows. In short, this is the region which may be truly entered by passing under the arch that says, Reno, The Biggest Little City In The World."