It was a discouraging winter for Larry R. His girlfriend was pregnant and he was broke. He couldn't even buy her a Christmas present. His job mopping floors was dreary and low-paying but he couldn't get another because he could not read.

Larry could not read newspaper want ads, and when friends told him about jobs he seldom responded, because he knew there would be application forms that he could not fill out. He was discouraged, and when a friend suggested going after some easy money he was ready.

"We robbed a gambling joint. It was awful. One guy got shot and one guy got caught, and he told on everybody else for leniency," Larry recalled.

The police had forms for him to sign: "They said blah-blah-blah and sign right there, and that's what you do. You don't know what it say. There was a lot of the forms."

Because it was Larry's first offense, he was put on probation in a vocational training course for the retarded. But he is not retarded. He is just functionally illiterate.

Educators and researchers agree there are now at least 23 million adult Americans who cannot read well enough to write a check, fill out a job application, follow written directions or understand a map. Reading below a sixth grade level, they can memorize traffic signs, bus markings and brand names, but they cannot read to their children or decipher report cards.

These adult illiterates, unable to function productively, are estimated to include 60 to 80 percent of the nation's prison population, half the chronically unemployed and a third of all welfare recipients. When they get work, their jobs tend to be dull, menial, low-paid and short.

Educators say 23 million -- approximately the population of Canada -- is a rock-bottom figure that underestimates the problem of illiteracy.

Education Secretary Terrel H. Bell told Congress recently that an additional 40 million people were "not proficient" at reading in 1975, when the best studies were done. Allowing for population growth, Bell said the problem now amounts to "a total of 72 million people who function at a marginal level or below."

According to Rudolf Flesch, who wrote the book "Why Johnny Can't Read" in 1957, the United States ranked 14th in top world literacy levels then and is 49th now among the United Nations' 158 members.

The numbers of functional illiterates in this country are swelling not only with nonreading dropouts and high school graduates, but also with the recent influx of refugees and immigrants, the majority of whom are not literate in their own languages, much less in English.

In a society ever more complex and mechanized, nonreaders are increasingly a handicapped underclass. Businessmen surveyed for guidance on what to put in President Carter's proposed youth bill in 1980 astonished labor leaders by declaring unanimously that what jobless young people needed most was remedial reading.

Theirs is not the complex need of college freshmen whose prose is tangled, dull and badly spelled, although that problem receives much more attention. These people somehow never got hold of the very first building block for a normal modern life.

"There are no boundaries," Bell told the House subcommittee on postsecondary education. "Functional illiteracy is prevalent in the large cities, small towns and in the countryside."

In its July report on the Department of Education's Adult Basic Education programs, the National Center of Education Statistics found ABE's 2.2 million students to be 46 percent white, 20.6 percent black and the rest Hispanic, Asian American or Native American. More than two thirds were studying below the eighth grade level, the rest for a high school diploma.

"I suppose some of them could be called 'learning disabled,' " said Gilbert B. Schiffman, who called the national Right to Read program a failure when he resigned as its director in 1978. "But I believe that's a cop-out for us as educators. As a society we still have to teach these people to read. Somewhere along the line, we missed it."

Most indeed do function and sometimes they are fairly well paid. Occasionally they can hire other people to read for them, and learn what they know of the world through television.

Nonreaders run printing presses, drive buses and taxis on well-known routes, clean streets, load trucks, assemble autos, serve hamburgers, sometimes help build skyscrapers.

The functionally illiterate can sign their names, but they cannot read most of the things they sign, and they will not admit it, even though they risk being cheated. They are probably the nation's last great closet minority.

They are so determined and adept at hiding their handicap that literacy workers are accustomed to arranging a secret rendezvous right out of spy novels.

"I have been a policeman in a small town since 1930," said one student quoted in a pamphlet of the Literacy Volunteers of America, one of the few nationwide organizations tackling the problem. "I don't read so well, but I've always gotten along.

"Now they tell me I must attend the police academy and I'm afraid someone will find out I can't read. My LV tutor and I have started to meet in a town 30 miles from here so no one will know I'm learning."

Peter Waite, head of Laubach Literacy Action, which runs 600 small volunteer programs in 46 states, said such arrangements are common. "We'll meet with them almost anywhere. In Washington, we had a logger who asked us to meet him in the back room of a bar after he finished logging. He said he couldn't go to a library or a school because he never went there otherwise and people would know."

Waite added that volunteers had worried about what materials to use with the loggers. "We thought maybe we should train them with girlie magazines or beer ads, but it turned out that some of them were thrilled to work with nursery rhymes and fairy tales so they could read them to their kids," he said. "Unless you're actually involved in the case you can't predict it. You have to be flexible."

The National Assessment of Educational Progress found last year that 47 percent of urban black youth are functionally illiterate. Jonathan Kozol, whose book about urban schools, "Death at an Early Age," rocked complacent educators in the 1960s, has written a new book about nonreaders called "Prisoners of Silence." He says the tally reflects an old national habit: generations of inferior education for blacks.

Patricia C., 32, still remembers her utter bewilderment when, at the age of 8, she entered school in rural South Carolina for the first time in her life and indifferent school officials put her in a third-grade class. Her father, a sharecropper, "didn't see much need to go to school when it was so hard to put food on the table," and by the time he relented, it was too late for Patricia.

She never caught up. Shy by nature and teased for her ragged clothes, she sat mute and terrified in class, convinced that she was hopelessly stupid and that her inability to read or answer questions was her own fault. In those days, many black youngsters didn't get tested much, and when they stayed home from school out of frustration, no one cared.

Like most nonreaders, Patricia has told her share of lies to potential employers and bluffed her way through a lot. "You get to the point where you think about taking your own life," she said. "You can see how being in jail is kind of comfortable. They feed you and give you some work. In a way you don't have to worry no more."

Patricia now works at a cleaning job in Washington, studying nights to learn to read. "When I can read better I'll maybe get a real job and have some time to myself," she said.

The U.S. Census does not recognize the existence of these people. At the directive of Congress, it defines as literate anyone who has finished the fifth grade. By that yardstick, 99 percent of all Americans are literate.

The definition, established in the Voting Rights Act, allows most people to vote and is not likely to be changed. But it creates the illusion that all Americans can read the newspaper and write letters to it; that they can, in fact, function as citizens who are able to make informed decisions about their own lives and national issues.

The Census Bureau now appears to have decided that the literacy problem is solved, for the 1980 census didn't even ask the question. Neither does much of government.

Officials of the Bureau of Labor Statistics, the Department of Health and Human Services, the Justice Department and other agencies agree that their target groups include large numbers of functionally illiterate adults, but the agencies keep statistics only on years completed in school. By those numbers, the literacy problem is tiny.

"If you believe there's no problem, I have a bridge I'd like to sell you," said Michael Fox, director of a Washington literacy program called PLAN (Push Literacy Action Now) that is bursting at the seams with students. His newsletter, The Ladder, exhorted its readers to complain to the Census Bureau about its definition. The bureau now admits its measurements are out of date.

If the literacy community is beginning to be heard from, that is news. Nonreaders, by definition not good at expressing themselves, have not been politically noisy, and adult illiteracy is not a political issue.

"There's no constituency for it," said Ernest Boyer, commissioner of education in the Carter administration and now president of the Carnegie Foundation for the Advancement of Teaching. "When I testified on Capitol Hill for all the programs, the ABE one brought a big yawn. Most of the programs launched are backed by articulate, strong, organized public-interest groups and these people don't have a voice."

Barbara Bush, wife of the vice president, is the major exception. She likes to tell audiences that Washington "spends $6.6 billion a year to keep 700,000 illiterates in jail." She calls illiteracy "an epidemic problem," and workers in the field see her visibility on the issue as a sign of hope.

Actor Eli Wallach and singer Johnny Cash, co-stars of a CBS-TV movie on an illiterate farm worker, "The Song of Jesse Hallam," also make occasional appearances to publicize the problem.

But for the most part, education lobbies, civil rights groups, politicians and antipoverty workers have campaigned to improve basic education in primary school, where they think the problem begins. Educational research also has focused on the way schoolchildren learn and on how best to teach them to read, so that many literacy programs use infantile teaching materials that insult and bore adult learners.

Once people leave school, in fact, the vast industry that scrutinizes national education ceases to track them. So the literacy problem has been most noticed in the high schools.

Craig T. was the class loudmouth at Washington's Cardozo High School. A burly 18, he swaggered and jived to intimidate the teachers so they wouldn't call on him and reveal his secret. "Man, I was ba-a-ad," he recalled. "The teachers always put me with the dummies and we'd play around all the time, act up to hide ourselves. Boy, I was scared back then."

Craig said pseudo-tough young men like him, unable to do their lessons but too proud to admit to any failing, are often the ones doing hallway shakedowns, smoking dope and hanging out. Admitting illiteracy, he said, is much harder than admitting to a drug or alcohol problem.

"How can you survive if you don't read? All you can do is go bad," he said. "The kids ain't tough. They're just scared and need help. . . . some guys is on the borderline, you know: smart guys, they can either be somebody great or get themselves shot."

Craig is in a PLAN class now and has become a kind of preacher to his former friends and other nonreaders about the need to get serious: "Somebody got to tell them ain't nobody can make it for them in the future. Nobody gonna try to help them if they don't try to help themselves."