Outside Madison Square Garden the self-proclaimed "father of the death penalty" debated a wheelchair-bound Vietnam veteran over the virtues of killing.

Inside, Marianne Hofmann was introduced as "our hero - our little David, except she's a woman."

But the real hero of the evening was the electric chair. Every time it got a mention, they gave it a good hand.

Talk show host Bob Grant cried out for the chair's revival. The Patrolmen's Benevolent Association president, Sam DeMilia, brought the crowd to its feet when he said: "If somebody takes a life, his life must be taken."

Criminals, DeMilia called them, but some in the crowd weren't having that. "Not criminals, they're animals, Sam," one called out.

"Not animals. Animals are better," came another cry, and there were murmurs of assent.

If it was the return of the death penalty and other measures they believe will make New York safer that turned the audience on, it was Hofman - unknown beyond her circle of friends three days ago - who turned them out.

She borrowed $5,500 against her savings to rent the 5,000-seat Felt Forum in the Madison Square Garden complex and telegraphed invitations to New York's politicians to come to hear little people speak out. Little people other then the speakers were charged a $1.50 donation to help reimburse Hofmann.

Despite her prediction that she would break even or better "because the citizens of the city feel the same way I do," Hofmann lost money, since only about 500 people paid their way in. However, she and her supporters told the largely empty auditorium that the rally was only the beginning of a crusade.

Criticism of politicans was one of the rally's features. "Down with crooked politicans." someone shouted periodically. No office-holder came to listen or sent a representative.

The only generally known speaker was DeMilia, who said "this place should have been filled to the rafters," after he had waited outside the arena about an hour counting the house and weighing whether it was better to speak as scheduled or to skip a rally so sparsely attended.

Many in the crowd said they had been crime victims, and even more seemed to be among New York's injured.

Like a rhythm section, voices called to the speakers or simply cried out a hope or curse.

"Clean up the dope, clean up the dope," a woman called over and over until a television crew walked to her seat to interview her.

Her chant hardly disturbed Louis Floh, chairman of the West Harlem-Washington Heights-Inwood Senior Citizens Council, who was reminiscing at the microphone about the Depression. "People didn't have jobs. People didn't have homes. But they could sleep on a park bench without being mugged," he recalled fondly.

The most often mentioned villains were lenient judges and Gov. Hugh Carey, who vetoed a bill to restore New York's death penalty.

Irving Yanoff, who calls himself "father of the death penalty" because of his early and fervent desire for the return of capital punishment to New York State, had retreated from his debate with wheelchaired Domingo Santos after the possibility of racism was raised. Yanoff found a friendlier climate inside the Felt Forum.

A White believer in law and order must be prepared to be called a racist, Father Edmond T. P. Mullen of Holy Trinity Church, in the Hofmann north Manhattan neighborhood, told the overwhelmingly white crowd.

The evening's most unpopular speaker was Julian Synder, who set out to say that the mugger running down the hall with your wallet or purse isn't the real criminal.

"Yes he is," someone shouted.

When Snyder said it was the banks that the people should go after, you could hear the word "socialist" run through the audience. One woman demanded: "Where did this liberal come from?"

Snyder was the only speaker who used props. He held up large photographs of Chase Manhattan Bank Chairman David Rockefeller, former Federal Reserve Bank chairman Arthur Burns and present Fed Chairman William Miller.

"I just want to create an awareness of who the real criminals are," said Snyder, who writes a financial newsletter.

The Rev. Freeman Yearling, who had begun the rally with a modest invocation asking the Lord to bless "law and order" and voicing thanks to Him "that things are as well with us as they are," returned to the rostrum to the Amercians who make, interpret warn that "invisible factions" control and enforce the laws.

"That's what we want to hear about, the invisible factions," a young man called out. He said afterward he was disappointed that Yearling didn't give some details.

When Hofmann's $5,500 worth of time ran out, guards ahooed lingerers from the auditorium. Leaders and supporters gathered on the sidewalk making plans to keep in touch - to keep the crusade against crime going.

Joseph Erdelyi was also there, offering to sing his composition, "I Want a Policeman on My Street," for 25 cents.

Erdelyi said he's written nine presidential campaign songs. Four were for George Wallace including "All the Way With Wallace and LeMay," three of former representative John G. Schmitz (R-Calif.) and two for candidates he forgets.

He has also set the words of the Stat Spangled Banner to three other pieces of music, including a Hungarian "sucide love song" called "Glommy Sunday."

Walking to the subway, two young men from Queens found they had something in common - they'd both been mugged in New York.

"I think what Hofmann needs is a steering committee," one said as they headed for Queens. CAPTION: Pictures 1 and 2, Marianne Hofmann, who borrowed $5,500 against her life savings to rent a hall in the Madison Square Garden complex, presides at a rally that criticizes lenient judges and calls for restoration of the state's death penalty, photos by UPI