From the long glass wall of Mayor Kevin White's commodious and sleekly modern new City Hall chambers can be seen a striking panorama of what is referred to her as the revival of Boston. It has been singled out as one of the big successes in the nationwide effort to reclaim the lost elegance and vitality of American cities, and it is the sunny part of the story from Boston as the new decade begins.

Four floors below, crowds of the young and well-dressed weave through Faneuil Hall, the centerpiece of the new Boston. Once the meeting place of Revolutionary patriots and the stage for serious and impassioned debate and liberty and the destiny of an emerging nation, it is now a fantasyland for grownups. Cleaned up and restored to its redbrick Colonial-era grandeur, the inside is a bright warren of ice cream parlors, bakeries, a poster shop selling blowups of the early Beatles and a chi chi carryout featuring eggplant submarine sandwiches.

A couple of decades ago the area was known as Scollay Square, and it symbolized rot at the heart and soul of this venerable city. It was a district fallen to tatto parlors, honkytonk bars and burlesque houses with buxom strippers who entertained sailors off ships in the harbor. Occasionally a wide-eyed Harvard student would wander over from the tamer side of the river.

The urban renewal wrecking ball changed all that. More than $600 million in urban renewal grants, and generous subsidies and tax breaks to attract developers and businesses, provided the seed for the renaissance that changed Boston's downtown skyline. Each year more than $1 billion in government and private money is poured into downtown construction. Office space has doubled, and 30,000 new jobs have been created.

Around Faneuil Hall and the old Greek Revival style Quincy Market across from it, sin and squalor were rubbed out as what was historic and distinguished was cleaned up and put to new use. The boutiques and restaurants that stand there now might best be described as the standard amusements for the rebellious and idealistic '60s generation -- grown up and calmed down and living not only in the suburbs but on Beacon Hill and the South End.

A decade ago on the campuses of universities in and around Boston, these habitues of the new Scollay Square were insistently impatient for civil rights for black Americans and for new opportunities and power for the poor. Now they and the whole born-again downtown are estranged and disconnected from a bitter, hate-filled upheaval out in the neighborhoods.

Out there, among the left behind, the poor Irish, Italians and blacks, there are still bad schools, poverty and joblessness and the belching of smokestacks on those factories and shipyards that didn't move away long ago. The air is thick with the angry noise of racial clamor. The feeling of conflict is so tangible that one imagines Belfast or Beirut. Poor blacks and poor whites compete for scarce, vandal-scarred public housing while white youths are knocking the daylights out of blacks on the streets.

On top of all this, the city now faces severe financial problems. It is without money to run its schools through next year and the subway system shut down at midnight Friday for want of funds.

One obvious lesson of Boston in 1980 is that it is possible to successfully undertake a massive downtown renewal without really making a dent in the other problems of an old city -- that as you build restaurants of blond bentwood chairs and hanging ferms downtown, you may be building resentment elsewhere.

Kevin White is the nation's senior big city mayor. Powerful and supremely confident, he is urbane and at the same time a master of the ungentlemanly art of Boston brawling politics. On a sunny day last spring, he strode back and forth in front of his big picture window as he expounded in rambling and incomplete bursts. He stopped often to turn and stare at the broad plaza or restaurants, boutiques and shops around Faneuil Hall below. The scene through the glass is for him both backdrop, something like a tableau of Manhattan behind Tom Brokaw on the "Today Show," and part of a vision he has of bringing a change to Boston that moves into the background the legend of Boston as a city only of beans, Brahmins and scrappy politics.

He laughs with bemusement as if even he is astonished at the turn in fortune for this dowager of a city, 350 years old this year and for the last three decades suffering in a state of shabby gentility.

"Boston," he says proudly, "is in vogue."

There is the ripple of gentle snobbery as he tells a visitor up from Washington how he thinks the rebuilding and restoration going on in the nation's capital will bring it into competition with Boston as a world-class city renowned for its old charm combined with new amenities.

Yet, from time to time a competing reality intrudes rudely on the merry scene. One day five years ago the mayor and his aides were in his chambers looking out when a commotion erupted down on the plaza. Captured by a Boston Herald-American photographer, who got the 1976 Pulitzer Prize for his picture, it is a vibrant portrait of hate. There is also perhaps unintended symbolism and irony in this photograph, for it shows one scruffy white youth yoking and holding a black businessman as another white youth charges at him with the pole of a billowing American flag. The starkly modern city hall is on the right and the revolutionary meeting place a stone's throw away.

Boston is no stranger to violence or conflict among its citizens. Its genteel face has hidden hatred between classes, nationalities, and colors since colonial times. The emotion burst forth again in 1974 after a judge's order for school busing, and the ensuing furor has been part of the texture of life in Boston's neighborhoods ever since. And what police began to notice after the first couple of years was that the turmoil moved from the hallways and schoolyards to the squares and streetcorners.

Yet Boston's is a peculiar form of continuing racial warfare -- beatings, stonings and shootings, no great thunderclap of an explosion, no fire this time.

Police believe four killings, at least six firebombings and more than 200 assaults this year may have been racially motivated.

"We're constantly in the business of investigating and trying to keep the lid on things," said S. Chuck Wexler, an assistant to the city police commissioner with responsibility for supervising a special police unit created two years ago to handle racially motivated crimes and misdemeanors.

In early May, a black sugar-factory employe, leaving work late one night, was set up and fatally stabbed by a gang of white youths.

A few days later across the city in Brighton, a black youth -- fingered by a white neighborhood gang in the projects as having bullied a deaf white child -- brandished a shotgun and fired a volley that blinded a white youth. Black families in the housing project where the shooting occurred had their apartments firebombed and vandalized.

White students at Brighton High formed a group called S.P.O.N.G.E. -- the Society for the Prevention of Niggers Getting Everything.

Later in the month, a Guatemalan woman and her 2-year-old daughter living in the housing projects of the Italian-dominated island of East Boston were injured by a rock-and-bottle-throwing crowd of whites. While she was being treated at a hospital downtown, her apartment was firebombed.

Along a frontier of racially changing neighborhoods in Dorchester in late July, white youths stoned the first black residents as they moved on the block. Others drove by yelling, "Niggers, get out!"

In early August a gang of black youths chased and shot and killed a white youth behind a YMCA in Dorchester that straddles a black and white neighborhood.

"They have their side, and we have our side," a black youth told a reporter.

A couple of weeks later, a young black electrical engineer for Raytheon was taking a break from painting furniture in his Brighton apartment when two white youths chased and fatally stabbed him. His body, carrying no identification, lay in the morgue for days until fellow employees recognized him from a sketch the Boston Globe ran.

In this atmosphere, the city has been carved up into zones. Oldtimers sit down the black college student or visitor to issue a series of warnings: stay out of South Boston and Charlestown; the Italian North End section is reasonably safe during the day but stay away at night; downtown is a "neutral" area but be careful; don't go to the Red Sox games at Fenway Park, and be on guard if you go to see the Celtics at Boston Garden.

Newcomers from other cities bristle at these restrictions but residents here, for the most part, go along with them.

No one here is really able to explain fully why Boston's racial troubles have been so much more severe and long-running than other cities'.

According to one view, it is because Boston was the first big northern city to face an order for school busing. When cities like Cleveland and Buffalo got orders later, they looked at Boston and vowed not to go through that uproar, according to this theory.

Another view, widely held here, is that the trouble has persisted because of the complex character of Boston itself. There is an elaborate, almost tribal, sense of class, race and ethnic origin here, and strong feelings about turf. The residents of South Boston, for example, are said to be not only hostile to black children coming to the local high school but suspicious of the Hyde Park Irishman who deigns to enter one of their neighborhood taverns.

The resentment among the white poor about their economic plight appears to be a factor in the unrest. In Irish Charlestown and Italian East Boston, one in five families makes less than what the Bureau of Labor Statistics estimates is necessary to maintain a modest standard of living. In black Roxbury, nearly one in three families is similarly poor. Many of the Irish and Italian families believe that affirmative action programs for blacks are giving them unfair advantage. One of the antibusing members of the Boston School Committee, Elvira Palladino, once said she gets mad when she sees a black man in a three-piece suit.

City planners here like to say that it took Boston 30 years to come out of the Great Depression. The years after World War II were not kind to the city as its factories and mills and shipyards, mainstays of its industrial base, shut down or moved away.

The economy of the new Boston is in banking, insurance and medical and service professions. Outside the city, there is a booming computer and high technology industry.

But suburbanites have gotten most of the jobs produced by the revival, picking up three of every five new positions.

Boston's schools, considered poor even before busing, are blamed for the plight of the city's residents. Like Washington, Boston graduates youths from high school who have not mastered basic reading and arithmetic skills.

"If you want to be an actuarial clerk at John Hancock -- which is an entry level job in our insurance industry -- you've got to be able to add," said Arnett Waters, manpower director for ABCD, Boston's antipoverty program.

Boston is a city with more than 100,000 college students and 91,000 adults in the neighborhoods who never went past the eighth grade. Here, the educated elite lives outside the city except for the relative few who live in the restored downtown neighborhoods. There are no affluent family neighborhoods here like Washington's white Spring Valley and black Upper 16th Street Gold Coast.

The city swells from a permanent population of 637,000 to a million during the day as suburbanites come to work.

The city government has arranged to lend $4.5 million of money Boston got in a federal Urban Development Action Grant to a firm that makes computer text equipment. At a time when the prime rate was climbing up in the teens, the interest on the 20-year loan was 3 percent, with no payments on the principal required until the year 2000. City redevelopment authority officials said the favorable terms were a price worth paying to get the firm to expand manufacturing jobs in the city instead of going out to the suburbs with the other computer firms.

The Prudential insurance company got a million-dollar-a-year break on its property taxes when it decided to build downtown. City property taxes for Faneuil Hall and Quincy Market are $1.5 million a year, but for the first three years after they opened, the two malls were required to pay only $50,000 a year. Since then they have paid the full amount, city officials say.

In the neighborhoods, residents stretch welfare and meager paychecks to battle inflation, skyrocketing heating oil prices and an archaic tax system that bites 6 percent of the cost of an average home in property taxes each year.

Voters in Boston revolted against their taxes on Election Day this year, approving a statewide referendum that forces the city to curb spending so that taxes are not above 2 1/2 percent of the market value of a home.

The property tax limitation measure will force $97 million in cuts in Boston's $800 million budget next year and more in following years. City officials have said this will more than likely mean deep cuts in the police and fire departments and in the public works and parks programs.

Already Boston is facing serious financial difficulties this year. The semi-autonomous school system is spending at a rate that will leave no money to keep classrooms open by March at the latest. White has gone to court to get them to cut back. The buses, trains and subways operated by the Massachusetts Bay Transportation Authority came to a shuddering halt Friday night when its operating budget ran out. State legislators were working yesterday to put together a $41 million bailout to keep the MBTA going through the end of the year.

A ray of hope this fall in Boston was the opening of a $38 million Hubert H. Humphrey vocational center with elaborately equipped computer and electronics labs, the first such facility in Boston, though the suburbs already have them. Set in a portion of a cleared site planned for an industrial park in black Roxbury, the school had 6,000 applications for 3,600 spaces, and the applicants included white children from vehemently antibusing South Boston, some of whom in fact did enroll.

The school is one of the long term solutions of the city to its violent social unrest. The mayor also views his plans for empowering blacks, now without any strong voice in either the commerce or Irish-dominated politics of the city, as another step toward healing the city's ills.

Last year he issued an executive order requiring that on all future development projects, at least half the jobs must go to Boston residents, a quarter of them to minorities and 10 percent to women.

In his inaugural address, beginning his fourth four-year term in January, White promised to establish a tough committee to deal with the racial problems. He appointed to it Cardinal Humberto Medeiros, Richard Hill, head of the First National Bank of Boston, and Davis Taylor, head of the holding company that owns the Boston Globe. The City Council blocked White's efforts to get strong powers, including the right of subpoena, for the group, but he went ahead anyway and recruited a black federal bureaucrat from Washington, Frank Jones, a lawyer for the Community Services Administration, to be staff director.

Jones said the most persistent complaint he heard after arriving this fall was that Hill and Taylor live in the suburbs and none of the committee could be described as men with roots in the neighborhoods of Boston.Jones is confident about finding solutions.

"The nature of the problem can be reduced to youth violence," he said one morning this fall. "Because it appears to be youth -- and they're acting out frustrations of all kinds -- I think we can get to it with a really concentrated effort.

"One of the major problems of Boston is the isolation of communities, both physically and psychologically. The question is why [are there battles over turf]? It's because it's all they got."

He said he believes that blacks, including those in leadership positions, have been too willing to limit their movements, fearing to go to Charlestown and South Boston.

"If the leadership of the black population in the South had been consistently afraid to exercise their constitutional rights, neither they, nor their children, would ever have had an opportunity to participate in this society."

On a crisp day in October, White was in his office and again at his window but, unlike the earlier interview, agitated, and gloomily preoccupied.

Earlier in the day, in back and forth debate at a panel discussion on the city's racial problems, he had found himself saying, "I finally decided, yeah, it's a racist city. There's no access in this town for minorities. It's a joke. It's ridiculous." The newspapers picked that up and were off and running.

"Sometimes when I go to something, I exacerbate it with my presence," he said wearily.

He brightened as he talked about the promise in his inaugaral to get jobs for all students successfully graduating from Boston's schools. How he will do it is something still being worked on.

"Those kids who went through the 12 grades didn't get a fair shake out of the Boston public school system. I thought [promising to find jobs] was doable. I thought it was manageable."

He moves on to a discussion of the jolting social change of the '60s and '70s.

"The depth of that change was almost a cultural revolution . . . There was more upheaval than people realized."

"These kids don't know what to join. Certainly not the school alumni -- that's not going to get you anywhere. Certainly not the Democratic Party -- that's not going to get you anywhere."

"I believe if I could take every high school senior [and find a job], that would say a lot. At least the symbolism of that is significant. Build the steps back."

Jobs are the key, he says, talking about his residency, racial and sexual quotas. He mentions also a plan to have some of the redevelopment money recycled to the neighborhoods as downtown developers pay off loans from the city.

That is all for the long run. What, he is asked, about the short term?

He stalks restlessly in front of his window, stopping to stand and stare at the throngs below as they wander in and out of the boutiques and shops, gazing as if out there was an answer. More than a minute passes before he speaks again, his words first coming out in an uncharacteristically soft voice, sounding genuinely perplexed. He repeats himself twice, his voice rising in frustration each time:

"I don't know.

"I don't know.

"I don't know."