Books and beauty ride together on wisdom's carousel. In few places is the joining more uplifting than the library in this small coastal community on the Pawcatuck River that separates Rhode Island and Connecticut.

The library was built and endowed by local book lovers in 1894, when readers were fined if they marked a page by folding it. Physically, the structure dominates the town. The architecture is Italian palazzo, a grand design of spaciousness that rises four stories and is cut with high circle-top windows. Surrounding the library is Wilcox Park, a beatific 18 acres where borrowers can take their checked-out books and liken the preserve to the Forest of Arden in Shakespeare's "As You Like It": "...and this our life exempt from public haunt finds tongues in trees, books in the running brooks, sermons in stones and good in everything."

At this point, the story of the magnificent Westerly library turns hard. David Panciera, the director, took some time out the other morning to talk with me about the financial peril his library is facing. "It's pretty much hand-to-mouth now," he said. "Two years ago we cut 10 percent off our budget, hoping to stay within our means. It's worked, in the sense that we balanced it. But, damn, there's nothing left over."

The budget squeeze meant reducing the library's schedule from 64 to 52 hours. Then in May, another cut, brought about by a local referendum, was equal to a 60 percent reduction in the book budget and the loss of two staff jobs.

Few communities in America don't have similar threats to their libraries. Earlier this week, oversight hearings on public library programs were held before the House subcommittee on post-secondary education. Rep. Paul Simon (D-Ill.), a scholarly man who can say, as Saul Bellow did, "I loved books and I wrote some," was as dismayed as anyone that libraries are under assault. Aggressively, Simon is about to take his subcommittee to all parts of the country for several weeks of hearings.

What's already known is that the Reagan administration has proposed reducing services to public libraries from $62 million to $47 million. This 25 percent cut matches the proposed reduction of monies -- $171 million to $128 million--in school library programs.

Although federal funds are only a part of the total resources that support local libraries, little money is coming in from elsewhere. It isn't likely that block grant money will be going for books. As a result, citizens are served by fewer libraries opened fewer hours and offering fewer services.

In Yonkers, New York state's fourth largest city, three of the five branch libraries are now open only two days a week. In Chicago, 500 fewer people are employed in the city's 84 branch libraries; the book budget has not been increased in recent years, even though inflation is between 10 and 15 percent and the average cost of books has gone from $9.37 in 1969 to $23.96 in 1979. In California, the past two years have seen a 22 percent drop in the number of libraries.

In Washington, the library system was recently cut $1.3 million. While the Martin Luther King library is keeping to a 64- hours-a-week schedule, the four regional libraries went from 64 to 48 hours. The 24 neighborhood facilities are opened only 40 hours a week. Hardy Franklin, the director of the city's libraries, reports that 11 friends-of-library groups have been formed in the city to resist further cuts.

The attack on libraries is actually a subtle form of censorship. It is a denial of access to knowledge, collectively stored in the community and catholically cherished by the citizens. Old-style censors told people what they couldn't read. The new style censors--under the pretense of sound economic policy--are telling us when, where and how we can't acquire knowledge.

Not on Wednesdays or Saturdays anymore, and only from noon to six on the other days. Not at the library on the corner of Main and Elm; that branch was closed and is now "consolidated" with the one across town. Not with better reference books, nor with new telecommunications systems, nor books by mail, nor books in large print or on records.

It is in keeping with many of the other insensitivities of the Reagan budget that one of the administration's policies would involve suppression of free access to ideas and facts.

One promising note in all this is that, as librarians' budgets fall, the ire of librarians seems to be rising. Whether before congressional subcommittees or back among the shelves, they are telling citizens that libraries are under siege and it's time to fight back.