A few days after being sworn in as a freshman member of the 101st Congress 17 months ago, Rep. Craig T. James (R-Fla.) mailed a newsletter to every household in his district.

"Democracy works best when the people are deeply involved in the decision-making process," James wrote in soliciting his constituents' views on a broad range of issues. "I will use the information you provide me to be a better representative for the people of the Fourth District of Florida."

Four months later, he reported the results of the survey in a second newsletter and saluted the 37,000 residents of the 4th Congressional District who responded as "patriotic Americans who care deeply about the challenges facing the 101st Congress."

What James did not say was that the names of those 37,000 patriots had been meticulously logged into a computer system in his congressional office, becoming the first building block of what now is a large and sophisticated targeted-mail operation.

Those people and thousands of others subsequently added to lists coded by subject area have since been bombarded by mail from James -- 750,000 personally addressed letters in less than a year and a half, according to members of his staff. At first-class rates, the cost of these mailings to taxpayers is $187,500.

Like many of his colleagues from both parties, James is applying the techniques and hardware of political direct-mail campaigns to the business of representative government. He and others defend the practice as a vital means of keeping in touch with constituents.

But it also has a decidedly political fringe benefit: Voters peppered with personal mail from their congressional representative on subjects of concern to them are more likely to support the lawmaker at election time. Critics of the system, which has few restraints in the House, argue that it amounts to a taxpayer-financed direct-mail program that is a significant factor in the House reelection rate of 98 percent or better since 1986.

Congressional use of mail is growing, with much of the increase coming in response to mass-mail campaigns by organized lobbies, and lawmakers are becoming far more sophisticated in using it. Outgoing mail from House members' offices, always far greater in election years, totaled 134 million pieces for the first three months of this year.

At the same time, House members are relying less on impersonal newsletters full of bland copy sent in bulk to postal-patron addresses and more on personalized letters dealing with specific legislative topics and directed at particular slices of the electorate.

According to projections, House members are about to exhaust the $41 million they appropriated for their mail this year, and are headed for a record total of $79 million in mail costs by the end of the fiscal year.

Recently, the House voted to delete $25 million added to a "dire emergency" spending bill for the rest of the fiscal year to cover some of the extra mail costs. James and other lawmakers who supported the cut thus could claim to have voted to hold down mail costs, although the deletion did not mean less spending. By law, the Postal Service must continue to deliver franked mail even after the appropriation expires.

Members of the Senate, which this year has $23.7 million appropriated for mail, must abide by individual dollar limits on mail set by a formula based on state populations.

While some House Republicans frequently criticize the congressional frank as one of the tools that have kept them in the minority for 35 years, party officials actively encourage maximum use of it for political gain.

In last June's issue of a campaign newsletter published by the National Republican Congressional Committee, a top aide to one GOP critic of the frank, Rep. Dick Armey (R-Tex.), offered a primer on using it. The aide, Kerry Knott, advised Republican lawmakers to:Introduce or cosponsor legislation for the specific purpose of being able to send mail about the legislation to targeted groups. Send broad-issue update letters about the economy and foreign affairs that "avoid stating your position . . . . " Include a box on questionnaires for constituents to check their age grouping, "a polite way of targeting senior citizens."

Knott also advised Republican House members to use the vast quantity of incoming mail to develop lists for targeted mail.

"In political terms, though, nothing is more valuable to a member of Congress than the lists of constituent letters," Knott wrote. "Think of it this way: Members of Congress normally receive between 250 and 500 letters each week. If the information from those letters is properly coded, a congressional office can develop a near-perfect list for targeted follow-ups . . . . To be able to push the constituent's 'hot button' over and over again on an issue he or she cares about . . . is a powerful tool."

The search for the "hot button" has led to creation of an informal network of congressional aides who advise the staffs of new lawmakers on how to establish an effective mail program.

When Rep. Peter Hoagland (D-Neb.) was elected to the House in 1988, for example, he drew on the expertise of Rep. Tim Johnson (D-S.D.), who relied heavily on direct mail in winning his House seat in 1986.

Johnson, according to his aides, inherited a large targeted-mail list from his predecessor, Sen. Thomas A. Daschle (D-S.D.) and has been building on it ever since. Every letter received in the office is logged into the computer and coded by specific issue. The system has more than 200 issue codes.

When there is a legislative development on ethanol fuels, for example, Johnson's staff at the press of a button can crank out letters to virtually every constituent who has expressed an interest in the subject.

"People expect to hear from their members of Congress and to see them," said John Y. Devereaux, Johnson's press spokesman. "It has a political benefit to be sure.

But you can be damn sure if Tim Johnson didn't communicate with his constituents, an opponent would accuse him of not doing his job."

An aide to a Democratic member from California, where politicians have been in the vanguard of those using direct mail in their campaigns, is far more explicit on the political advantages.

"At the beginning of every year, we sit down and try to figure out what we are going to do with mail," said the Democratic aide, who asked that neither he nor the lawmaker for whom he works be identified. "I've always tried to send the most mail to the people least likely to vote for him" in order to build support in areas where he runs poorly.

With the kind of computerized lists available, said the aide, the targeting possibilities are almost unlimited. Ethnic directories, for example, allow lawmakers to cull the names of almost all Jewish constituents from a computer tape of registered voters.

The political benefit of targeted mail is "real simple," said Earl Bender, a direct-mail consultant who has advised Democratic lawmakers on setting up congressional mail programs. "It demonstrates competence, it demonstrates effectiveness and it demonstrates {the lawmaker} is paying attention to

the same issues I'm interested in . . . . It demonstrates more

than anything else that this officeholder is interested in communicating with me, that he thinks I am important enough to have a dialogue with."

James, 49, quickly learned about the power of targeted mail. A trial lawyer and political neophyte who accomplished the biggest upset in the 1988 House elections by defeating 20-year Democratic Rep. Bill Chappell, he does not seem to fit the profile of an ambitious freshman lawmaker trying to solidify his seat through advantages of incumbency. James ran against Chappell as "the embodiment of everything that is wrong with Congress" and has endorsed an eight-year limit on House terms.

Yet James also hired as his first chief aide a former counsel to

the National Republican Congres- sional Committee and promptly set up the kind of mail program recommended by the GOP campaign committee.

"There are nearly 700,000 people in my district, and I don't know how to communicate with 700,000 people without mail," said James, who last year voted with most of his Republican colleagues to limit and disclose mass mailings.

James's staff has added steadily to the initial list of 37,000 constituents who answered his first newsletter survey. For example, every one of the nearly 8,000 people who wrote to him opposing the catastrophic-illness insurance legislation ultimately repealed by Congress last year went into the computer. They became the core of a list of senior citizens that numbers 17,000 voters.

A separate list of veterans and military retirees is just as large. Smaller lists of voters concerned about such issues as the environment, education and child care also have been added, as has a list of 312,000 households of registered voters obtained from election officials.

With those lists, the computer equipment and virtually unlimited franking privileges provided at taxpayer expense, James has unleashed a blizzard of highly targeted, personalized mail to his constituents.

In April, he sent a letter to 312,000 households of registered voters discussing the "runaway federal deficit" and his effort to persuade members of Congress to return to the Treasury their most recent pay increase as a way of setting "an example of fiscal commitment and responsibility."

By refusing what he called the "congressional money grab" and returning his pay raise, James saved the taxpayers $7,100 this year. Informing his constituents of this decision cost taxpayers $78,000.