Public financing of the 1976 presidential election, while cutting more established candidates down to size for Jimmy Carter, may have also significantly cut the level of grass-roots participation in campaigns.

That is one of the conclusions reached by the country's foremost analyst of election financing, Herbert E. Alexander, after four years' study of the first publicly financed campaign.

Public financing, and its accompanying limits on campaign contributions, ended the era when a fundraiser could assemble 10 people in a room and walk out with a million dollars in contributions. So a well-known candidate like Sen. Henry Jackson (D-Wash.), who could probably have done that sort of thing, was brought down to the level of a little-known candidate, Jimmy Carter, who couldn't, Alexander says.

This was "the most important effect of the public financing system," Alexander writes in "Financing the 1976 Election," his fifth quadrennial book on presidential campaigning. "Better known candidates who had connections with wealthy contributors could have swamped Carter, and, without federal subsidies, Carter would have lacked the money to consolidate his initial lead," Alexander writes.

The law, enacted in 1973, provided millions of dollarts in "matching financing -- $21.8 million each -- to general election candidates Carter and Gerald Ford. The act also imposed a $1,000 limit on contributions from any individual, wiping out the so-called "fat-cat" who donated tens of thousands in years gone by.

At the same time, the law imposed strict new accounting requirements on candidates, limits on the uses of campaign money, and state-by-state ceilings on spending.

It was these elements of the act that Alexander says reduced participation at the grassroots level in presidential politics.

The limits fostered the "most cost-effective" means of campaigning. This meant a far broader use of television advertising, direct mail solicitations for money, and centralization of campaign operations.

"Cost-effectiveness," Alexander said in a press conference last week discussing his findings, in turn "brought a kind of professionalization to the campaigns which was not evident before" and a significant decline in volunteer activity.

The Carter campaign cut bumper stickers, Alexander reports, after a cost-benefit study showed that only one in five ever wound up on a bumper.

A Texas Republican official displayed for Alexander 5,000 buttons and 75,000 stickers for the entire state Ford-Dole effort. "'You want to see our entire contribution to the president's campaign?'" the official said. "'There it is on the shelf over there . . . The law says we can spend no more than $1,000 and we spent $1,020, so the last $20 is probably a felony.'"

The findings of Alexander, a political science professor at the University of Southern California and director of the Citizens Research Foundation, coincide in many respects with an analysis recently done by Harvard University for the House Administration Committee.

Both are expected to fuel the movement toward eventual major modifications -- including an increase in contribution limits and an end to state-by-state spending ceilings -- already under way in Congress.