The newspaper serving this friendly farm town carries on its masthead an expansive but probably unassailable boast. "PANA NEWS-PALLADIUM," the masthead declares in bold letters, "Containing More News About the Pana Trade Area Than All the Other Newspaper In the World."

For most of the year, news about the Pana trade area consists of the staple features of small-town life: births, marriages, funerals, high school sports, and automobile accidents. In mid-August, however, life, death, and traffic give way in the columns of the News-Palladium to an unending flow of stories about an event of transcendent importance to this rural community: The Pana Tri-County Fair.

The faid, held each Labor Day weekend since 1948, is the one annual ritual that everyone in Christian, Shelby, Montgomery, and Fayette counties (the Tri-County Fair serves four counties) here in east central Illinois has in common.

The fair marks the one time each year when the area's second-graders are allowed to stay up until midnight (or even later, if their parents have enough to drink at the nightly dance in the fair's Beer Tent.) It is one time when teen-agers from all the rural high schools can get together to show off their livestock, their Chevy pick-ups, and their boy or girl friends. It is the one time when grandparents from all four counties can find their old friends to reminisce about the fairs of yore.

The fair here, like county fairs throughout the rural heart of the nation, is the one great magnet that draws every local resident to the same place at the same time. As a result, the Pana fair proved a magnet as well for two men who are anxious to meet the people or the Pana trade area: the candidates for Congress here in Illinois' 22nd Congressional district.

The unexpected announcement last fall that George Shipley, the District's popular Democratic congressman, would not seek reelection in 1978 has given the 22nd, a sprawling chunk of corn and soybean fields, one of the tightest congressional races in the country.

The two candidates who won the primary elections in March both faced a recognition problem.

Terry Bruce, the energetic 33-year-old Democratic nominee, was well known in the district's southern sector, which he has represented in the state Senate for eight years, but he was almost a nonentity in the more populous northern counties. Dan Crane, the conservative, 41-year-old dentist who won a surprising victory in the Republican primary, was the darling of the district's Reaganite bloc, but was hardly known outside that relatively small segment of the population.

For both men, then, the fairs that marked the close of summer in the district's 21 counties were perfect for meeting people.

Working the fairs is probably the oldest form of political activity in this part of the country. Lincoln and Douglas debated at the Coles County Fair, just down the road from the present Pana fairgrounds, and George Shipley was a mainstay of the midways here during his 10 terms in Congress.

"You really can't do better than a county fair," Dan Crane explained while sipping a watery lemonade on a visit to Pana. "If you come about 7 p.m., when the people are just lining up for the grandstand show, and you do it all four nights - you're going to shake every hand in the county."

The candidates learned quickly, though, that one has to be discerning about which fairs to visit and where to go upon arrival.

"Now, something like this in Pana, that's great," Terry Bruce observed. "It's all local people.But you go to something like the rodeo over in Palestine - that's poor for politics. Palestine is right, you know, on the Indiana line, and half the people you meet don't even vote here."

Bruce found that certain parts of the fair are no-man's-land for politics. "The midway - that's fine," he said. "The livestock tents - fine. But over in the Beer Tent, some guy's always going to spill a pitcher on your shirt, and then the next place you go, the people start wondering what you've been up to."

Although the Tri-County Fair is a time for fun, fairgoers seemed to feel no resentment about the intrusion of politics into their party. The candidates represented just one more element of a thoroughly American tableau.

For the Pana fair is a classic showcase of Americans. If some European museum wanted an exhibit depicting life in the rural heart of America, it could do no better than to put the whole Tri-County Fair under glass and ship it overseas - lock, stock, and Ferris Wheel.

The fair is, for one thing, a great democratic leveler. Factory hands and company presidents, rich bankers and poor pensioners, farmers and college professors all don jeans and straw hats and stand patiently in line to ride the Rock-o-Plane or take a chance at the Skee-Ball stand. A school janitor could ask the principal's wife for a dance in the Beer Tent and not be turned down.

The fair displayed, too, the American penchant for competition. Almost everywhere a fairgoer turned he was likely a man, woman, cow or cucumber lined up against another in the quest for a ribbon.

The Tri-County Fair, in fact, offered more than 500 different classes of contests, ranging from beef cattle (85 categories) and swine (97) to garden produce, macrame, quilts, catsup, German chocolate cake, and every other imaginable product in which the grower or maker could try to outdo his neighbors.

For those who refused to fit their activities into any of the categories, the fair's organizers threw in one final contest, class 1227, for which the instructions read simply "Do your own thing." (The winner was a display of Pana-area pebbles.

In some classes, the criterior for victory seemed to be sheer quantity. The tables of the agriculture shed groaned under eggplants as big as pumpkins and pumpkins as big as watermelons and one great watermelon that filled a bushel basket by itself.

Other winners, though, prevailed on quality. The winning summer yearling heifer was a sleek, handsome 700-pounder that sootted her chief competitor a good 200 pounds but still liok the ribbon. The best mango pepper was the smallest in the show, but its cool, pale greenness and soft, perfect complexion made it a champion nonetheless.

The fair's most popular competition took place Sunday night when two dozen smiling young women promenaded across the grandstand stage in the pageant to compete for the 1978 Tri-County Fair Queen.

The pageant was a disappointment of sorts, because a local favorite, Carol Deere, the most beautiful girl at Pana High School, was beaten out for the crown by Karen Gudehus, a student nurse from Oconee.But as the people of Pana trooped out of the grandstand, they had to admit that the contest had been a fair one.

At the foot of the grandstand steps, the fairgowers ran into a competitor in another kind of beauty contest. "Good to see you, everybody," Terry Bruce said, shaking a few lanst hands."I need your help - we've got a tight race for Congress around here."