JOE GRADY is a red-faced masonry contractor from North Carolina who likes to kibbitz with reporters in the newsroom of The Winston-Salem Journal. Walking clumsily, his big belly swaying over his belt with every step, he'd nod his head at the lady journalists, slap the backs of the men, lean on the edge of a file cabinet, and begin to expound.

I never got to know Grady very well during the five months I worked on that newspaper. But now I have a photograph of him hanging above my desk. He's standing on a plot of farmland in rural and red-neck Yadkin County, grinning broadly, wearing green silk robes and cradling a machine gun. Joe Grady was the Grand Dragon of North Carolina's Federated Knights of the Ku Klux Klan.

I first met Grady on a Saturday night in late July. I had been assigned to cover a Klan rally and I was scared. The editor who runs the Journal newsroom on Saturdays, a kind and gentle man, got alarmed and solicitious when I joked. "Do you always send Yankee Jewish girls to cover Klan rallies?" I assured him that I have plenty of chutzpah, and then spent 20 minutes trying unsuccessfully to define that term.

A few minutes before I set out for the rally, a husky young photographer joined me. Ostensibly he was assigned to take pictures for my article, but I knew that the rally would end hours after his deadline. He was, in fact, my babysitter, and I spent the next half-hour listening to him tell me about all the things he'd rather be doing on a Saturday night.

Yadkin County is tough and poor. The old farmhouses are quaint and a bit depressing. A few years ago the drive through the county was probably lovely. The winding country roads, however, are now marred by small suburban houses. Mobile homes clutter the farmland, sheltering farmers' married children who can't afford a house of their own, or old people who can't pay to repair the dilapidated houses their fathers, grandfathers and great-grandfathers lived in.

Their frustration was apparent at the Klan rally. There were about 100 people there, including the wives and children who munched hot dogs and sipped cokes while they watched the white-robed menfolk mill around the farm. To an outsider, they were fascinating, evoking both pity and horror; it is difficult to understand the depth of the hatred they nurture. Despite tentative signs of a Klan revival, most of these men seemed to sense, beneath the bravado, that their traditions and their rhetoric are impotent. They quoted the bible, cursed the "niggers," and smiled as the words "racism" and "prejudice" crossed their lips. But their verbal jabs at busing, affirmative action and Joe Califano seemed perfunctory. It was hard to believe that the Klansmen saw any logic whatsoever in their argument against the Equal Rights Amendment--they claimed it would make unisex bathrooms mandatory in schools and in the armed forces, thereby making it easier for black men to rape white girls.

The Klan's courtesy to me was disquieting. The members were chivalrous Southern gentlemen, trying to guide me over the farm's rough terrain. They allowed me to question Grady and other Klan luminaries from nearby states. I generally got forthright, if predictable, answers. But I was always escorted by one of the squadron of clean-shaven guards, who wore military uniforms, with helmets and pistols. It took me several minutes to notice the cross that they would burn later that night; it was so large that I walked past it several times, thinking that it was a tree.

AS A CHILD I had nightmares about Hitler; showers terrified me. My encounter with Joe Grady and his band left no similarly traumatic impressions. They were repellant but trivial, farmers and workers in a juvenile boys club, parading around in silly costumes on an isolated farm knowing that people in the city wanted nothing to do with them. It's been a long time since the local Klan made headlines in Winston-Salem. The article I wrote, only a few paragraphs long, was buried deep in the Sunday paper.

Things changed when David Duke came to town a few weeks later. Duke is from a suburb of New Orleans, and is sophisticated, articulate, young and attractive. He is also a very charismatic organizer for the Knights of the Ku Klux Klan, a quasi-rival of Grady's group.

Duke shrewdly focused his energy on teenagers. Like their counterparts elsewhere, Winston-Salem's youths are energetic but idle, racing cars along the strip on weekend nights, looking for a little excitement. The Klan can potentially fill a void in their lives and they in turn can provide badly needed vitality to a dying creed.

Klan revivals are occurring throughout the country. If Duke is as persuasive as he is perverse, he may spread his faith through Winston-Salem. But he is trying to reach the kids informally through the school system. And apart from one or two crackpots, the school board members are good, solid, God-fearing citizens. They don't permit sex education in the schools. It is doubtful they will permit the Klan.

FOR MANY historic, religious and economic reasons, Winston-Salem differs from other Southern cities. Moravian German influences are as heavy as the Southern Baptists.' Industrial giants far outnumber heirs of plantation owners. The town has factories and warehouses but it also has museums and concert halls. Joe Grady is a mild aberration there.

The city has many more prosperous young black lawyers, doctors and bankers than outspokenly bigoted whites, although it is too soon to see whether these middle class blacks, riding in on a wave of affirmative action hirings, are more than tokens. They are certainly not representative of the blacks who are clustered in small homes and housing projects in East Winston. There are conservative whites in wealthier sections of the city, and on nearby small farms but, from what I could see, they are more responsive to Howard K. Jarvis and Proposition 13 than to David Duke and the revival of white supremacy.

My encounter with the Klan was probably my most dramatic adventure as a reporter in North Carolina but it was not typical. More common were dull evenings at high school commencements or jaunts to union meetings at rural hamburger stands. At the Forsyth County Courthouse I heard well-meaning politicians worry about library book thefts and ambulance service. At Winston-Salem's City Hall I watched a gruff old Republican alderman roll his eyes while a fellow board member--a 28-year-old former Black Panther--discussed problems of old people in a housing project.

THE FIVE MONTHS in Winston-Salem confirmed some of my preconceptions--and biases--about the South. But it shattered more. I met tax-revolters and tobacco farmers at the Grange Hall (to their delight, I parked my car and stepped out into a ditch), textile heirs at the Hyatt House and "spirit-filled" Christians at weekend barbecues. I baked Moravian sugar cakes and giggled through a meal in a restaurant that sandwiched its Virginia ham between slices of kosherrye.

But I spent more time with writers and architects, musicians and students, not unlike those in Cambridge. We spent evenings in front of the fireplace listening to Bonnie Raitt, shared peoperoni pizzas and reminiscences of Annie Hall, silently watched shooting stars from a wide veranda on hot summer nights, thoughts of machine guns and burning crosses far from my mind.

They were repellant but trivial, farmers and workers in a juvenile boys' club.