Once upon a time, this busy and prosperous little town boasted that it was the most progressive community in a state renowned for racial enmity.

Whites and blacks "get along just fine here," white and black townspeople would say.

"Outsiders" even noted the town's success. In 1956, a Washington Post reporter wrote about Tupelo: Race relations here are excellent and the white people show determination to keep them that way."

"In the 1960s, when racial unrest rolled from city to city across the Mississippi Delta, Tupelo proceeded quietly about its business, completely escaping the storm. The only major commotion to beset this community of 23,187 in the northeastern corner of the state came in 1967, when Tupelo celebrated its new designation as an "All-American City."

But now, the fairy tale has ended.

There is black protest, led by a popular, grass-roots civil rights group; and there is white backlash, led by the Ku Klux Klan.

What is happening here seems completely out of kilter with the times - and the public history of Tupelo. It raises questions about the success and the meaning of the 1960s civil rights movement, and about the reality of what has come to be called the "New South."

Those kinds of questions are asked repeatedly in this town where a nearly five-month-old black boycott - triggered by a run-of-the-mill police brutality case - has reduced profits spawned weekly black "marches for justice," virtually dethroned the town's traditional black leadership, and given the Ku Klux Klan a new cause celebre .

It has been nasty. On June 10, for example, local, federal and state officials watched nervously as members of the United League of North Mississppi, the black civil rights group, and the Klan staged demonstrations in the town square.

Some 1,000 persons - 700 for the league and 300 for the klan - participated in the marches and rallies that nearly coincided with one another. There were many local policemen, heavily armed with rifles and shotguns.

There was some violence, mostly verbal assaults and fisticuffs; and there were three arrests.

No one was seriously injured in that encounter, and most people here say they don't want another one.

But the tension has remained.

Black "silent picketers," carrying no signs, have kept a steady vigil in the neat, uptown central business district. They, in turn, have been watched daily by Klansmen in cars equipped with citizens band radios. Both groups seen intent on maintaining their presence.

Indeed, on a bright Saturday morning last week, Klansmen stood in full regalia on each corner in the central business district, solemnly distributing their literature.

"Neither the blacks nor the whites here ever would have thought things like this could happen in this town," said Felix Black, president of the Uptown Tupelo Business Association, whose storekeeper members bear much of the burden of the boycott.

"A good percentage of our local blacks would like to see this thing end . . . but the other blacks call them 'Uncle Toms,'" Black said.

Publicly, businessmen here say the boycott is having an adverse, but not a critical effect on their sales. privately, they say the boycott has cut sales receipts by 10 to 20 percent, with the hardest hit stores being those that mainly catered to the city's 22 percent black poplulation.

"Any time you have about 22 percent of your population not buying, you are going to hurt a little," Black said.

The boycott began Good Friday, March 24, after city officials refused to fire two white police captains who were fined $2,500 each in federal court for the beating of Eugene Pasto, a black inmate in the Tupelo jail.

The protest grew and the city government reacted erratically. The two officers, Dale Cruber and Roy Sandefer, were suspended for two weeks. They were reinstated, but demoted from captains to lieutenants. Eventually, they resigned from the police department, and were transferred to the fire department's arson investigation squad, where they have no arrest powers.

But it was too late. What began as a single-issue demonstrations developed into a case of mutiple, involving jobs, housing and education grievances - long held, but, until recently, only seldom and timidly voiced by Tupelo's blacks.

The difference, in this case, was the United League, a largely rural, mostly poor black people's organization led by Alfred (Skip) Robinson.

Robinson's federally paid North Mississippi Rural Legal Services lawyer is Lewis Myers Jr., who many see as a co-leader of the movement.

Both men are young, attractive, dynamic and agressive personalities. Both generally are resented by local whites, reviled by some blacks, and revered by most others.

Robinson, 42, construction worker, hails from Holly Springs, Miss., about 6 miles up the road from here. Lewis, 30, who also serves as general counsel for the National Conference of black Lawyers, spends much time in New York, where the lawyer's group is based.

Robinson worked in the 1960s civil rights movement. Lewis led student demonstration at Howard University in the District of Columbia in 1968.

Both men are seen as "outsiders" by many whites and some blacks here. Both are blamed or praised, depending on whom you talk to, for what is happening in this town.

"It should have happened a long time ago but our people have been led by too many heavenly minded niggers who were bent on ignoring earthly problems," said Robinson.

He acknowledged the harshness of his remark and tried to offer some palliatives. "We love them, but we disagree with them," he said of the town's older black leaders. "They say, 'Look at how far we've come since the 1960s' I say, 'Look at what we've lost and look at how far we have to go.'"

Ask almost any black here about the quality of his or her individual life and you will get a response based on present and expected sufferings, and present and expected joys. The answer will come from past and present humiliations and triumphs, ignorance of struggles gone by, and individual reservoirs of despair and hope.

For example, take Jack Clark, 64, a former migrant worker who has become something of a celebrity in Tupelo's black community because of his vocal duals with Klansmen watching the picket line.

"We used to have to get off the sidewalks for white folks," said Clark who has lived off and on in Tupelo "practically all my life."

"White folks were just as rough them as they is now. And them Klansmen, wooie, boy, you didn't go messin' with them. But now, I tells 'em to go to hell."

Or, take Verneceal, a shy, 19-year-old woman who wouldn't give her last name. She went to the integrated Tupelo High School, but she now attends the predominantly black Mississippi Valley State University at Itta Bena "because I didn't want to be around honkies anymore."

She said she will leave Tupelo for Los Angeles after college because she doesn't believe the present protest, which she supports, will do any good.

"The whites will still get everything," she said. "It's going to be like that. It's not ever going to change."

But, what about the protest?

"They started it too late. They should have started it long time ago," she said.

Tupelo, the seat of Lee County, is an economic boom town. Together with the country, it offers some 13, 400 industrial jobs, the third highest number in the state. Thirty years ago, the county barely offered 3,000 jobs in industry.

In 1950, Tupelo had bank deposits totaling $20.67 million. Nearly 40 years later, the town has total deposits of $404,22 million - second only to Jackson, the state capital.

But many blacks here claim they are not sharing in the boom. In jobrick Lee County, their official unemployment rate is 7.8 percent, compared to 4.5 percent for whites. Latest available figures put black median family income in Lee County at $4,365 a year, compared to $7,706 annually for white families.

White leaders here counter blacks have 30 percent of the available industrial jobs, although blacks make up only 22 percent of the popluation in the city and county.

The black boycotters say the whites' figures are exaggerated and that, in any case, black workers are concentrated in the lowest paying, most undesirable jobs in local industry and government.

Most of Tupelo's estimated 5,000 blacks live on a hill in the north end of the city. Most of them are poor and live in dwellings ranging from shanties, to a relatively new, but rapidly declining public housing complex.

The town's few "well-off" blacks - mostly minsters, teachers and school administrators - ususally can be found in modern, brick ranch style houses, frequently set next door to the shanties.

To many of the blacks in the shanties and the heavily littered fly-infested housing project, the 1960s civil rights movement brought little or no gains.

To many of those living in the modern homes - located next to the shanties because "open housing" is still pretty such a theory here - integrated schools and public accomodations, one black serving on the town's seven-member board of aldermen, and the presence of blacks working in places like the Bank of Mississippi constitute tangible progress.

Most of the boycotters are poor. They were what one white businessman and civic leader privately described as "the not-educated, the not-employed - they are not members of the class of blacks I would call progessive."

Therein lies a major problem.

The white-dominated business and political establishment here has tried to end the boycott primarily by working with blacks from the "progressive class." But most of the "progess" blacks - Boyce Grayson, the lone black alderman, is regarded as a notable exception - enjoy little or no support from the blacks involved in the boycott.

George McLean, white, 73, publisher of the Northeast Mississppi Daily Journal and a highly respected and influential civic leader here, explained why the city's white leaders leaned more towards the traditional black leaders in trying to solve the problem.

"First, they live here. We know them," McClean said. "We know they are good people. And besides that, a lot of them are my age," he said, laughing.

He added: "A young person fresh out of college or high school doesn't have the prestige or the influence of an older person. He doesn't have the influence of a preacher who has been in this community for years or of the leader of a respected black organization . . .

"Those are the calibre of people we deal with," said McClean.

One of the black people of McClean's calibre is the Rev. James Wilson, pastor of the Rising Star Baptist Church.

Wilson - "I'm in my 60s" - says he has great respect for McClean "because he is a man you can work with."

"I many be blind to some things," said the minister, "but as far as the city of Tupelo is concerned, if anything is brought to the attention of the city fathers, you can always get some cooperation."

Wilson said he believes the city settled the police brutality dispute amicably, and implied that he saw no need for the continued boycott.

"After all of that was accomplished, I don't know how the league came in here," he said. "They got a lot of demands, but I don't see how they are going to reach any conclusion."

Tupelo is a "great place," said the minister. "Tupelo is the most liberal and the best city in Mississippi," he said.

McClean said he and other members of the business community have tried to deal with Robinson and Myers, but that the two have failed to show faith. More than that, McClean said the league hasn't been specific in making most of its demands, and has been "unrealistic" in making others.

"We took care of the brutality thing, and then they came up with all of these other grievances. Okay, we told them that if they give us the specifics of what they want, and if it's something that we have some control over, "We will do our best to meet your request.'

"But they [league officials] won't talk. Where do you go when you can't talk to the people who are causing the problem?," McClean asked.