James Jones, the burly police chief, cruises this all-black cotton-patch town in a beat-up blue '72 Matador. It has squeaky suspension and tires balder than Kojak. He hesitates to chase down speeders on rainy days, until the town buys him new tires. That day isn't coming soon.

Down to his last box of cartridges, with an escaped convict on the loose, he shakes his head over what might happen should it come to a showdown.

After federal money ran out last fall and his 11-man force was chopped to three, there were seven break-ins and two armed robberies, the first such crimes in two years. A federally built housing project burned last winter because no one was around to take the call.

For a time there was no way to report crimes or fires, except in person. City Hall telephones were cut off for non-payment until the hat was passed to turn them back on.

Jones hasn't drawn a paycheck since last fall, one of 10 city employes of 43 still on the job after federal grants ran out to pay them. He's run through two savings accounts. He raids a sister's vegetable patch to feed his wife and two chidren. He's three months behind on the trailer he rents for $100 a month from Municipal Judge Harold Ward, who isn't getting paid either, and might lose the trailer.

When the telephone does ring in his office, it's usually a bill collector. "Tell him I don't want to talk," he barks to his deputy. "The town is in worse shape than I am, and I can't get a toothpick on credit."

One of the oldest black towns in America is fighting to stave off financial collapse. Like other towns, Mound Bayou is hit hard by Reaganomics and cold-turkey cutbacks of federal aid.

But, unlike the others, it is the victim of its own success, its skill at Great Society grantsmanship and currying the liberal largess that built it into the pride of Mississippi's Black Belt.

So distressing to blacks has been the prospect of bankruptcy for Mound Bayou, founded in 1887 by ex-slaves off the plantation of Confederacy President Jefferson Davis, who wanted to prove that blacks could prosper if they stuck together, that donations have poured in to try to bail it out.

Since a Memphis disc jockey began begging two weeks ago on a radio talk show, more than $130,000 in contributions has flowed into WDIA, the nation's first black station.

On Wednesday the station paid off a $59,280 judgment against the town after lawyers for a white woman who won a personal injury lawsuit against Mound Bayou froze the city's bank account and, in effect, slapped a lien on the 19-acre public park.

The radio campaign prompted listeners, many of them unemployed, to send checks or drop by the station to empty change from pockets and purses.

Money has come from as far as California and New York. On Easter Sunday a caravan of 700 cars set out from Memphis, 110 miles away, to try to help resurrect the town, cheered on by sharecroppers as they drove past the Gospel Bird Fried Chicken and Pecan Meadows Country Club.

In Mound Bayou, the mayor was presented with a check for $120,000, about half the town's short-term debt, while 10,000 applauded.

"You think of a Mississippi town and the movie 'In the Heat of the Night' comes to mind, with everything dusty and every black shuffling and saying, 'Yassuh,' " said the disc jockey, Bill Atkins. "But blacks have never shuffled in Mound Bayou. It's a beautiful place, a focal point of our heritage. If it fails, we all fail. It was founded by slaves who won their freedom before the emancipation. Mound Bayou is to blacks what Israel is to the Jews.

"When New York was in trouble, the federal government bailed it out. Cleveland got help, and so did Chrysler. But we don't have the federal government to bail us out anymore. We have to do it ourselves."

In its early days Mound Bayou was self-sufficient, but poor, a town of shanties, dirt roads and open sewers. But in 1969 Mayor Earl Lucas began chasing after federal money with the ardor of a thirsty man hunting water in the desert.

"We were really behind the eight ball for a while," he said. For more than a decade, as the darling of civil rights advocates, it drew $10 million in government grants and loans from four administrations.

Before President Reagan pulled the plug, federal money had built Mound Bayou's homes, paved roads, constructed a modern health center and funded a hospital, cutting the Delta's black infant mortality in half.

Washington installed a water system, built a 19-acre park with an indoor swimming pool and paid city workers to collect the garbage, police the streets and put a roof over hundreds.

In 1970, 85 percent of the housing was substandard. Today Rosie Jackson, 21, is among the few who live in tumbledown shacks. Federal money has built or has rehabilitated perhaps 50 homes, and has put up another 50 units of public housing.

But under Reagan, money has been hard to find, and some housing programs are being transferred to the state. Jackson and her three children will have to make do in her $25-a-month shanty with its leaky roof, broken screens and boards askew.

Prospects are bleaker for health care. Terrence White, administrator at the 34-bed Mound Bayou Community Hospital, founded by a black fraternal order in 1942, said he fears that the charity hospital will have to close in September, when it stands to lose $1 million a year in federal grants for inpatient treatment, along with community health centers across the country.

But here in the Delta such services have made the difference between life and death, helping to cut Mississippi's high infant mortality rate in half over the last 15 years. Last year MBCH delivered 635 babies to poor black mothers, many of them turned away from other hospitals because they had no money or medical insurance.

White said he has 29 documented cases of patient abandonment by area physicians who refused treatment once they learned that a patient couldn't pay, dispatching them to Mound Bayou.

"We're the last alternative," said White, who said he fears an increase in infant mortality. Great strides had been made in rural health care, especially nutrition and patient education, at the hospital and at the $800,000 Delta Health Center, an outpatient facility planned and staffed years ago by Tufts University Medical School.

Among those who depend on both facilities are women like Willie Jenkins, 28, who gave birth to her ninth baby in a car last week during the 45-mile drive from her home in Leland to the hospital.

"She'd have had the baby at home if it weren't for Mound Bayou," said her mother, Zeto Thompson, 59. "We don't have the money to go anywhere else."

"If the hospital closes, they won't have any place to go," said Dr. Willie Lucas, the mayor's brother and director of the hospital and the health center. "They'll have their babies on the roadside."

While the health center and hospital are the last medical resort for poor Delta blacks, who pay a $3 registration fee and $1 for prescriptions, they also provide 300 jobs as the biggest employer in town. The bicycle factory on the outskirts hires 25, with most people working the rich black earth to raise soybeans, cotton, rice and wheat.

"To pump so much federal money in here, it's a crying shame to let it all go down the drain," said Lawrence Ross, an unemployed railroad dispatcher, sipping a soft drink at Ruby's Fine Foods, the town's only restaurant.

At City Hall, a sign advises visitors to see the receptionist before entering the plush inner offices. But there is no one to greet them, and the mayor is as likely to be answering the telephone as is the police chief.

Many blacks in the South regard the modern City Hall as a shrine, a half-million-dollar federal monument to black achievement in Delta, its entrance decorated with wood carvings of black heroes: Muhammad Ali, Hank Aaron, Martin Luther King Jr., Mayor Lucas. Most whites in the area, however, view it as a slap in the face to the taxpayer.

"It's as if I took all my assets and built a big home, then couldn't pay the mortgage and income taxes," said a white lawyer from a nearby town, who declined to be identified because he doesn't want to lose his black clients. "When the government pulled the plug, all they had was a big house and nothing to sustain it."

"They've been living high off the hog," said Ed Jackson, 40, a white state legislator who refused to support the town's request for a local tax bill that would have raised property taxes enough to pay off the lawsuit. A 30 percent property tax increase would have been impossible for locals to shoulder, he said. "I would have done the same thing for any other city."

But Mayor Lucas accused Jackson and the white Bolivar County delegation of racism, pointing out a similar bill introduced for a white town, Bay St. Louis. Enmity is epidemic.

"Their courthouse is better than the federal courthouse in Oxford," said white farmer Sam Long, 69, an ex-Democrat who lives in nearby Shelby. "And they can't afford to keep it up. What do you need with that big a City Hall for such a small town? It's just a fortress built by Democrats, a way for JFK, LBJ and Jimmy Carter to say, 'We love you.' Money flowed to Mound Bayou under President Nixon, too.

"They should have built industrial parks, something to generate a tax base, instead of a building so the mayor can recline in a nice office."

Mayor Lucas defends his order of battle against poverty. He said federal money stopped just before it put Mound Bayou over the hump. An industrial park was next on the agenda, he said, and to attract outside industry the town had to offer prospective settlers the basics: a modern water and sewer system, recreation, schools, a hospital and paved roads that covered holes so deep that "mud once came up to a mule's belly," recalls Minnie Fisher, 85, the honorary town clerk and historian for Mound Bayou.

As Reaganomics has taken hold in Mound Bayou, city officials have kept the lights low to cut utility bills. Last year the town collected $68,000 in property taxes, barely enough to cover the $60,000 electric bill.

With farmers hurting and local industries laying off, unemployment is running at 50 percent, Lucas said. So far half the residents are delinquent in property taxes, scraping by on average annual incomes of $3,679, about one third the national average.

The $240,000 town budget is so tight ($50,000 is owed in back wages to employes such as Chief Jones) that it can't afford liability insurance, leaving it vulnerable to lawsuits, such as the one by Ernestine Walker, a white woman who said she hurt her back falling into a hole outside City Hall after paying a speeding ticket in 1978.

She sued for $59,280 and won, just one among an army of whites angered with Chief Jones' lucrative speed trap. His radar gun was confiscated later by state troopers under a state law that banned radar use in small towns.

With impending cuts in the wind, Mayor Lucas saw red ink coming. Grants began to run out in February, 1981, while the city had contracts to pay workers through the end of the year. Last summer he climbed into his faded green '73 Buick and drove to Atlanta, Chicago and St. Louis, to shake foundation money trees, but came back empty-handed.

His credit cards were revoked and, unable to travel, he took his crusade to the telephone, running up a $1,700 bill.

When Mound Bayou couldn't pay, city telephones were cut off. "It was embarrassing, . . .but we couldn't do anything about it," Lucas said. The city borrowed $35,000 from Cleveland State Bank, using the 1982 budget as collateral, to meet its payroll.

Then a water well cracked, which took another $30,000 loan to fix. Last October the state supreme court upheld Walker's judgment, and in March her lawyer garnisheed the city accounts.

Desperate, Lucas went on the air with Bill Atkins two weeks ago and bemoaned the city's dilemma. On a coffee break a woman soothed, "Don't worry, son, the Lord will provide." Moments later, contributors jammed the station.

The town has been rejoicing ever since, although some residents are chastened to be living off charity.

"We always got by, though we never had too much," ex-mayor Leslie Liddell, 74, said. "Now, after getting all that government money and hiring so many people and paying them top wages, I think our officials got a little too high geared. Contributions might get them off the hook for now, but they're going to have to live within their means."

If nothing is done, the weeds of summer will soon entangle Mound Bayou, maintenance chief Joe Woods predicted. His 16-man crew has been slashed in half, among them Comprehensive Education and Training Act (CETA) and Volunteers in Service to America (VISTA) workers whose programs were never meant to last forever.

He's now relying on men like Willie Terry, 68, one of four elderly part-timers who has volunteered to put in a full day's work for half pay, just to keep the pipes unplugged and the garbage collected.

"Town would be smelling pretty bad if we didn't do what we could," Terry said.