Tens of thousands of Spaniards rallied in a main central plaza today, raising their arms in the fascist salute to mark the fifth anniversary of Generalissimo Francisco Franco's death.

Packed between a palace that King Juan Carlos uses for state occasions and the royal opera house, the ultra-rightists stridently expressed their rejection of the democratic process that replaced Franco's dictatorship. Estimates of the crowd varied. Spanish state television and police put the total crowd figure at 250,000 but news services reported that 60,000 to 80,000 people were at the rally.

The rally, organized by the confederation of nationlist war veterans who fought for Franco in the 1936-39 Spanish Civil War, was held where he traditionally inveighed against the enemies of his government. He made his last public appearance in the plaza, seven weeks before he died on Nov. 20, 1975.

Since then, Francoists have gathered on the Sunday after his death date. What would be little more than a passing exercise in nostalgia gains significance as the numbers yearly appear to increase. Five years after the dictator's death, Francoism remains a potent political force when it comes to organizing rallies. The demonstrations rival those of the 1930s in grandiloquence and regalia.

Electorally, the movement remains insignificant. In the 1979 general elections, only one ultrarightist gained a seat in the 350-member congress.But the speakers today tried to finesse this by reiterating, to mass applause, that the vote was a "sham" and a "trick."

The continued popular appeal of Francoism rests, in the opinion of Spanish analysts, on the ability of the far right to contrast the stability, economic development and national unity of the 40 years of dictatorship with the shortcomings of the still fragile constitutional democracy.

The far right's criticism of the democratic process centers on the escalating terrorist problem posed by Basque Marxist secessionists in northern Spain, growing unemployment, difficulties facing business and the democratic committment to decentralize the centralist administration left by Franco.

A popular slogan, five years into the constitutional reign of King Juan Carlos, is "under Franco we lived better." Wall posters announcing the anniversary rally proclaimed, "You can feel it. Franco is still present." Franco's only daughter, Carmen, presided over the speakers' platform. Civil war marching songs played at full volume, many of them Spanish translations of German Nazi Anthems.

A collection of essay on aspects of the five years of post-Franco Spain, published here recently by liberal academics and writers, stresses that a continuing nostalgia for a regime that spanned nearly half a century should only be expected. A rebuttal of the far right's charges of democracy's shortcoming by analyst Pedro Calvo Hernado argues that the main current difficulties were born under Franco.

According to this analysis, the ETA terrorist phenomenon took root in the 1960s reacting to repression of the Basques. The current economic difficulties are blamed on Francoist mismanagement and failure to understand the effects of the 1973 oil price increases that cut deeply into Spain's then-booming economy.

The consensus among the volume's contributors is that Spaniards, only recently exposed to free speech and a free press and learning to make use of basic civil liberties such as the right to form political parties and exercise the vote, will increasingly be able to put Francoism, and democracy itself, into perspective.

In general elections, constitutional referenda and regional and municipal votes held since 1975, Spaniards have consistently turned their backs on any return to the Francoist past. Nevertheless, the initial enthusiasm for democracy as the overnight provider of well-being has been replaced by what Spaniards term a growing "disenchantment." Combatting such a trend, the influential liberal Madria daily newspaper El Pais repeatedly reminds its readers in editorials that democracy is "the least bad system of government."

While the neofascists and the Franco nostalgists held sway in the capital -- until late tonight cars tooted through Madria with banners flying -- all major party leaders, including Premier Adolfo Suarez, were on the hustings in the southern region of Andalusia, where Senate by-elections are set for next week.