DES MOINES, FEB. 8 -- Rep. Richard A. Gephardt (D-Mo.), the Washington insider turned prairie populist, tonight narrowly defeated fellow-midwesterner Sen. Paul Simon (D-Ill.) as Iowans rendered the first verdict on a Democratic presidential field still largely unknown to much of the nation.

With 95 percent of the 2,487 caucus sites reporting, Gephardt led with 31.3 percent, Simon had 26.5 percent and Massachusetts Gov. Michael S. Dukakis was third with 22.3 percent, according to the Democratic Party's official results, which reflect delegate strength. There were 52 Democratic delegates at stake.

William Carrick, Gephardt's campaign manager, attributed his candidate's success here to "Gephardt's gutting out the tough times and sticking to" his appeals to economic nationalism and anticorporate populism.

The other four Democratic candidates were well back in the pack, including the one-time front-runner in the 1988 field, former Colorado senator Gary Hart, who had less than one percent and was battling to stay out of last place with Sen. Albert Gore Jr. (D-Tenn.), who abandoned his Iowa campaign last fall to concentrate on the South. Before his campaign was rocked last May by his relationship with model Donna Rice, Hart had been the choice of 65 percent of Iowa Democrats, according to a Des Moines Register poll. "Let the people decide," Hart said when he resumed campaigning in December. In Iowa, they did.

Jesse L. Jackson apparently beat former Arizona governor Bruce Babbitt for fourth place. Jackson had 8.7 percent to Babbitt's 6.2 percent, more than quadrupling support Jackson received here in 1984. He appeared to make the point he had hoped to in Iowa by winning a substantial vote in a state that is less than 2 percent black.

Babbitt's weak fifth-place finish leaves his long-shot candidacy in dire straits.

Turnout was reported high throughout the state. State Democratic Party Chairman Bonnie Campbell said that the 1980 record of 100,000 caucus-goers was easily broken.

While Gephardt's win will make him this week's Democratic coverboy, the results here were close enough that no one was prepared to draw sweeping conclusions. "I think the race is going to stay muddled for a while," said Sue Ellen Albrecht, chairwoman of the Wisconsin Democratic Party.

"Gephardt got the appeal here because the downside of the economy," said Rep. David R. Nagle (D-Iowa), former state Democratic chairman. "The question is whether he can put together the other side of the loop in states that are doing better."

Though Dukakis had hoped to finished higher than third here, he could take some comfort from the fact that his two main midwestern rivals were closely enough bunched that each should be able to carry some momentum into New Hampshire. That means the anti-Dukakis vote there is more likely to be defused; Dukakis might have been in greater peril if Simon or Gephardt had won decisively in Iowa.

Gephardt, 47, who turned his stalled campaign around here in its closing weeks with tough talk on trade and heavy spending on television ads, was building up his biggest margin in western Iowa, the most rural part of this hard-pressed farm state.

Network exit polls showed that Simon did best among caucus-goers who had attended college, while Gephardt won among those with less education and lower incomes.

Gephardt appealed to rural voters as the cosponsor of the Harkin-Gephardt bill that would give farmers the power to impose production controls on their crops in order to drive up their prices. And he appealed to people anxious about job loss and trade deficits with threats to impose tariffs against trading partners that do not open their markets to U.S. exports.

Gephardt's approach to trade has been labeled "protectionist" by editorialists all over Iowa -- and the rest of the country -- but he angrily insisted on the stump that "the establishment" does not understand the hurt caused by closed factories, lost wages and terminated insurance benefits. He also insisted his trade bill is designed as a "club in the closet" to open markets. "When we stand up, they open up," he told audiences.

Though Gephardt campaigned here longer and harder than anyone else -- logging an unprecedented 148 campaign days in the state -- his campaign was lagging until he began airing a television ad Dec. 26 that threatened to impose tariffs to raise the cost of a Hyundai automobile to $48,000 if the South Koreans refuse to eliminate trade restrictions that, he said, make a Chrysler K-car cost that much in Korea.

Simon built his campaign around an evocation of the traditional Democratic themes of compassion for the needy. "I am not a neo-anything," he said when he launched his bid last spring. "I'm a Democrat." On the trail, he frequently quoted Hubert H. Humphrey and sought to turn his bow tie, horned-rimmed glasses and fuddy-duddy appearance into an asset by presenting himself as an unpolitician with too much integrity to turn himself into a slick media package.

Simon led in the polls here last fall, but his campaign lost momentum when he had trouble explaining how he could initiate a major public-works jobs program and other domestic-spending programs, hold the line on taxes and still balance the federal budget within three years. "Simonomics is Reaganomics with a bow tie," Gephardt said in one of the two dozen Democratic debates.

Dukakis spent 81 days campaigning in Iowa, selling himself as a hands-on chief executive who transformed his state's ailing economy into one of the hottest high-tech growth center in the nation and who balanced nine consecutive state budgets for good measure. His critics here said he never found a way to show Iowans passion, even though he ran affecting ads about

the homeless and the Nicaraguan civil war.

In the closing weeks of the campaign, as the Gephardt surge became apparent, Simon began to tell voters here to be wary of "election-year conversions." Simon ran a radio ad pointing out that Gephardt had voted for the 1981 Reagan tax cuts, which provided a tax bonanza to the corportions Gephardt was now attacking and which, Simon said, produced the trade and budget deficits he was now trying to remedy. The ads also noted that Gephardt had voted for the MX missile and B1 bomber, and the 1980 grain embargo, unpopular stances here.

Yet Simon showed little instinct for the jugular. And after a few uncomfortable days of attacking Gephardt late last month, Simon largely abandoned the effort.

Dukakis chose never to take Gephardt on, and he now faces a critical strategic decision about how to blunt the momentum the Missourian is sure to gain from tonight's win.

Dukakis said last night he was running a "national campaign" and immediately sought to play down expectations about how he will do in New Hampshire. "Nobody's ever carried a New Hampshire primary by more than 10 percentage points," he said.

The next event on the calendar is eight days away in New Hampshire -- Dukakis' backyard. Polls have shown that Dukakis has a base of about 35 percent of the vote in that state, but his strategists fear that Gephardt might become competitive overnight by seizing the largest share of the anti-Dukakis vote on the strength of his victory here.

The biggest strategic question the Gephardt camp faces is whether his message, tailored to a hard-pressed farm state, can play in booming New Hampshire, with its 2.1 percent unemployment rate. "This is a national message," said Gephardt speechwriter Robert Shrum, "and it's going to play everywhere. We're not going to change a thing."

Gephardt said he expects his basic message about "regaining control of our economic destiny" to be as effective in a low-unemployment state as it was in Iowa.

"People are worried about jobs and wages," he said. "Exactly what I said here will apply everywhere."

Simon also stressed that he will not change his basic message as the campaign moves out of his native Midwest. "I haven't tailored my messsage to Iowa," he said.

Jackson's campaign manager, Gerald Austin, said: "We're thrilled. This is fantastic. We're right on target. We've expanded our base."

Austin added, "If you listen to what the Democratic candidates were saying a year ago and what they're saying now, they're all starting to sound a lot more like Jesse Jackson."

According to Gephardt adviser Richard Moe, one loser tonight was Gore. "Al Gore's gamble did not pay off," said Moe. "He was gambling that he would face Simon or Dukakis in the South. And that clearly is not the case," because Gephardt's showing here will enable him to go on to the South for the "Super Tuesday" contests March 8.

Gephardt has more immediate concerns. His campaign is out of money. And Tuesday, the candidate will appear at just one event -- a noontime rally in Manchester, N.H. -- and spend the rest of the afternoon on the telephone "dialing for dollars," in Carrick's phrase. Gephardt has a $500-a-head Washington fund-raiser scheduled for Wednesday night.

Meanwhile, Gore has a fund-raiser in Dallas that night and expects to raise $750,000. "There was no clear winner tonight, and there will be a different winner next week," said Gore spokesman Arlie Schardt. The others "will have to come to the Super Tuesday states and catch up with Al Gore," he said.

Staff writer Edward Walsh contributed to this report.

Iowa" sweatshirt in Waverly.

Candidate ................... Votes ................%

DEMOCRATS....

With 1,737 of 2,487 precincts,

70 percent, reporting:

Babbitt ...................... 8,043 ...............9%

Dukakis ..................... 18,036 ..............21%

Gephardt .................... 24,116 ..............27%

Gore............................ 192 ...............0%

Hart............................ 895 ...............1%

Jackson....................... 9,764 ..............11%

Simon........................ 21,397 ..............24%

Uncommitted................... 5,249 ...............6%

REPUBLICANS

With 2,439 of 2,487 precincts,

98 percent, reporting:....

Bush......................... 20,160 ..............19%

Dole......................... 40,627 ...............37%

Du Pont....................... 7,970 ................7%

Haig............................ 412 ................0%

Kemp......................... 12,065 ...............11%

Robertson.................... 26,711 ...............25%

No preference................... 782 ................1%

SOURCE: Associated Press