This classic American town in the Alleghany Mountains along the Susquehanna River has seven churches, cable televison, Diet Coke, a 24-hour restaurant, a Pennsylvania State Lottery computer, a 120-year-old railroad yard and 85 percent unemployment.

The national recession came here late, but when it did come last fall it swept through like the violent floods that periodically come down the river valley. It left Renovo a shambles and nearly all of its residents out of work.

Now this self-sufficient, conservative town in the middle of Pennsylvania is being rescued by an unlikely lifeguard: the U.S. Navy. It has awarded to United Chem-Con, a minority-owned electronics company based in Lancaster, a $4.4 million contract to build ship cargo containers, called seasheds, in Renovo's sprawling railroad yard.

The Navy contract, obtained with the help of Renovo's Republican congressman, Joseph M. McDade, will create jobs for 120 of the 900 unemployed workers here.

"It means life to the town," said Bob Jones, assistant plant manager for the new facility being set up in the main building of the railroad yard.

Fifteen hundred people live in this mile-long sliver of a town between the river and the railroad tracks, and 4,500 more live around it. Fast food is 30 miles away. A World War II tank stands guard at the war memorial at the town's entrance, its gun tilted skyward in salute and defiance.

Even for the matter-of-fact and self-reliant residents of Renovo, the Navy contract in hand seems like a fantasy after the nightmare of last autumn and winter, when Jones and so many others lost their jobs.

On Sept. 1, the A&P closed, leaving 20 people without work and Renovo with just one supermarket.

On Oct. 1, Berwick Forge and Fabricating Co. pulled out of the railroad yard, where it had been manufacturing 15 boxcars and hopper cars a day. The last 250 of its 550 employes were laid off.

In November, Conrail stopped using Renovo to change train crews.

Two days before Christmas, the YMCA, where the Conrail crews had stayed and which was the center of the town's recreational life, also closed.

On Jan. 1, the Piper Aircraft plant, just across the river in largely residential South Renovo, closed its doors and added 120 workers to the unemployment lines.

Just two days later, in what one town official called "the final blow to our economic situation," fire destroyed three other major businesses on the town's main street.

After that, nearly every employable person who didn't own his own business, work at one of the two banks, the hospital or the remaining grocery store was out of work. About half the town's storefronts still are vacant.

Wayne Keen, plant manager at what a humble spray-painted sign now calls "United Chem-Con: Renovo Works," said he expected to see things change in Renevo. He was plant manager when the same group of buildings was Berwick Forge's Renovo Works in the railroad yard that consumes as much space as the town itself.

"What we think we have going for us is a group of folks that are nicely skilled," said Keen, 51. "We just need to exploit other things." Making rail cars is no longer feasible because, as he noted, there are 167,000 surplus ones.

"I've heard so much negativism lately. I think people have got to snap out of it. They've got to snap out of it," said Keen, who has 2,000 job applications. "Right now, we're the only industry in town."

The 32 seasheds Keen and his workers will build are not unlike the railroad cars once produced at the facility, although they have considerably less character. The seasheds are essentially huge girder boxes, with no tops and a hinged floor that folds up out of the way. They are to be stacked in the holds of warships for rapid loading and unloading of tanks and trucks.

Keen has his engineers bidding for other Navy contracts and for some private jobs as well.

"If it has metal in it, we're bidding on it," he said.

Asked if the plant once again could be the kind that would provide the range of jobs--from manual labor through skilled welding and engineering--to keep the town's young people coming back after college or military service, he answered, "Absolutely."

He showed off the rail yard's E-shaped main building, where the seasheds will be built. Its longest part is 80 feet wide and longer than a football field. The Susquehanna River was actually moved south half a mile by the railroad during the Civil War so the facility could be built; pilings reach down through 17 feet of fill to the rock riverbed below.

In the first half of this century, 3,000 men worked there, servicing locomotives, building and repairing freight cars, and assembling trains. Steam and diesel locomotives were driven right into the building.

Three huge cranes spanning the width of the building are driven along tracks at the top of the walls. Two are the largest east of the Mississippi River, capable of shifting 65 tons each and making locomotives look like toy trains.

Berwick Forge stripped the facility, which is owned by Conrail, when it left just under a year ago. United Chem-Con is putting $1.5 million into transforming it into a modern metal working shop.

Renovo is, mysteriously, still able to tug back its young, a talent many small towns seem to have lost. The owner and publisher of the weekly Renovo Record is Ronald W. Dremel, 27, who bought the 112-year-old paper with a loan from the local bank in January, 1978. Dremel grew up here, went away to school and came back.

"I like it here," he said. "I wouldn't get to own my own newspaper almost anywhere else, and here I get to do a little of everything."

Circulation for the 20-page tabloid is 1,900, up from 1,050 when he bought it. Along with contract printing, it pays the bills for Dremel, his pregnant wife and child, and for six employes. His only reporter is another returnee, Jack Rooney. Rooney, 40, spent 17 years as an engineer for Conrail before retiring to the town.

"I've been in approximately 40 states and 17 countries," he said, "and I haven't found anything that like I better."

The owner of the town's jewelry store, Norman Delaney, 33, came back home after 12 years away, bringing his wife.

Richard Gibson, also 33, the administrator of the new 50-bed Bucktail Medical Center, moved here from a similar small town in West Virginia. He said he was impressed with the people's loyalty to Renovo.

"It's real strong," he said. "When times were hard, nobody picked up and left. And the kids seem to like to stay."

During the summer the streets are filled with children, infants to teen-agers. There were eight arrests last month, all for disorderly conduct and drunkenness.

"The major problem we have" with crime, said Wayne Short, a teacher at the high school, "is the kids get a little too much alcohol and stand on the street corners at night and howl at each other."

David Snodgrass, 33, a happy-go-lucky engineer at United Chem-Con who was out of work for 22 months after being laid off by Berwick, said, "I've been here all my life, and my dad and granddad worked for the railroad. This community has got everything we need."

Everything, that is, except jobs.

Things are looking better, no question. Clanging from the railroad yard once again drifts across the tracks to the town's business district, and at 3:30, when the workday is over, men also drift across the tracks to fight the dirt and sweat of the day with beer.

But even when production on the Navy contract begins, just 120 men will be going back across the tracks at 3:30. Only more contracts will make more jobs.

The A&P is being reopened, as a Super Duper, and it will hire about 20 people.

There are rumors that a number of companies have been sniffing about the empty, 50,000 square-foot Piper plant, but there is not much more than rumor.

The trains, which built Renovo, don't even stop here anymore. The five or six daily freights, most half again as long as the town, just slice through, frequently at 60 mph, an indignity and danger that the Town Council is seeking to reduce by cutting the speed limit to 30 mph.

The town will need more than the indomitable spirit of its people to survive, but perhaps not much more, just a few breaks. It has, after all, survived the fickleness of the railroad.

United Chem-Con owner and President James B. Christian, 29, pledges faithfulness to Renovo, and says he intends to put the once muscular industrial town back in shape.

"We're definitely taking a long-term view with that project," he said. "Financially, we're committed to making that town go."

And the town is determined. Said Bob Jones, "There is light at the end of the tunnel."

Carmen Rosamilia, mayor for 22 years and owner of one of the town's two car dealerships, said, "I hope to have everybody working who wants to. I want to keep the people here. I have some things which I can't divulge yet. I'm like a good coach, I keep my signals to myself."

And Philip Marks, 62, the town's only Jew, owner of the town's only fine men's clothing shop and member of the bank's board of directors noted: "This is a low point for us. But I hope we're rebounding now. Renovo is going to turn."

Last week, the mayor held a thanksgiving service at the town's United Methodist Church. It was the close-parenthesis to a prayer service in October, after Berwick Forge pulled out.

For the faithful, there is the ultimate talisman: "Renovo" is from the Latin for "to renew." CAPTION: Picture, The depleted businesses of Renovo, Pa., face the tracks that once were their lifeline. Across the tracks, a sprawling, idled boxcar plant is reviving with a $4.4 million Navy contract to build cargo containers. By Carl Vroman for The Washington Post; Map, Renovo. By Richard Furno--The Washington Post