WHEN BILL CLINTON MOVINGLY PROCLAIMED, in his nomination acceptance speech last July, that he came from "a place called Hope," Democrats all across America began getting goose bumps. But back in Arkansas, in a place called Hot Springs—80 miles north of Hope—folks began scratching their heads.

Was their Bubba snubbing the city where he had come to live as a 7-year-old, where his mother still lives, where he had gone to Hot Springs High School and become an all-state sax honker and the Boys Nation super-student who had met JFK in Washington, D.C., in 1963? "What I heard," says local lour guide Rita Self, "is that I lot Springs was once known as Sin City and he didn't want to be known as coming from Sin City."

In fact, Hot Springs is a place with a past—once featuring gambling, gangsters, corruption and hookers—and Clinton had reason to think more about his image; than the venerable resort's. Charles Smith, 52, executive director the city's Webb Community Center, understands—and forgives—the prodigal son: "Everyone was pissed. But since he won—instant euphoria."

Local boosters have long boasted of Hot Springs' physical charms. Surrounding Hot Springs National Park in the Ouachita (pronounced WASH-i-tah) Mountains, the city (pop. 36,000) is named for 47 mineral-rich thermal springs percolating up beneath and just east of Central Avenue—nearly a million gallons a day. The town's most imposing symbol is the stately row of early-20th-century bathhouses along Central. One of the big local lures is the Oaklawn Jockey Club's three-month Thoroughbred racing season. First Mom Virginia Kelley, a regular, will have to gallop home from the Jan. 20 Inauguration for opening day on the 22nd. But these days, with talk of a Summer White House in the air—one rumor has Oaklawn owner Charles Cella lending his Lake Hamilton home to the new President—fast-track entrepreneurs are betting on a boom in tourism, investment and jobs.

"More businesses have changed hands in the last 24 months," says Dennis Magee, "than in the past 25 years." His Cafe Hot Springs hosts Wednesday's popular Poetry Night gatherings, and he was among a coalition of local leaders who met with Governor Clinton some six years ago to map out a Hot Springs revival. Magee, 51, praises Clinton as a "get-it-done guy who broke the red tape barrier for state and federal binding. Then—bang, bang, bang. New sidewalks. New awnings. Storefronts opened up. Things popped."

The hottest export now is Clintoniana, a rich mix of myth and memory about his upbringing that could be scripted as a film titled Apocrypha Now. Consider the secondhand story—told by a high school classmate of Clinton's—about the TV repairman who went out to the home of Bill's Uncle Raymond but found himself trapped in his car by the uncle's "ferocious dog." Bill ran across the yard and tamed the dog. "You'll be safe now, sir," he assured the TV man. When the visitor praised the boy, Uncle Raymond supposedly replied, "That's my nephew Bill. He's gonna be President someday. He's 10."

Some folks' ties to Clinton are indeed strong. Earline and James While have lived on the same lot since their 1948 marriage. Back then, there was no plumbing, no utilities and no paved roads around East Grand Avenue. James, now 67, worked for as little as $1 an hour, and Earline was, and still is, a school custodian. They raised nine kids, all of whom went to college. Their fifth child, James "Duck" While, 39, was a Minnesota Vikings defensive tackle on the 1977 Super Bowl team. Today the Whites have 10 grandchildren and one great-granddaughter. But Earline also remembers with affection the well-mannered boy for whom she cooked dinner after school—when his mom worked as a nurse anesthetist.

"Bill was obedient and didn't have foolish, childish ways," she says. "Wasn't tusslin' and rasslin' like other kids. He and [his brother] Roger called me honey, and they'd mind me just like they did their mother." No wonder. His favorite dessert was Ear-line's deep-fried apple and peach pies. "Even after he'd come home from college," she says with a grin, "I'd go over and make him his pies. So easy to please."

Later in life, when, as Governor, Clinton's tastes ran to hickory-smoked ribs, he'd stop by to chew the fat—the meat itself is quite hum—with the McClard clan on Albert Pike. McClard's Bar-B-Q restaurant has been a local landmark since it opened in 1928. Today they serve up 3.5 tons of barbecue and 250 gallons of beans in a Tuesday-through-Saturday week. "Bill comes in 'bout once a year, never sits down and eats," says Joe McClard, 49. "Goes back in the kitchen, always talkin'. Politician through and through."

Now Clinton will be President. "That's exactly what blows me away," says Joe with a bewildered grin. "Bill had to be so extraordinary to overcome that old 'barefoot, stupid and backward' deal. Makes you think, 'Where in hell did you go wrong?' He can serve for eight years and write his memoirs when he's 55. And I'll still be cuttin' ribs."

But many folks are content just to go with the flow—indeed, the celebrated waters beneath Hot Springs have made it a sort of laid-back Lourdes. Sallye Jean, 70, and her husband, Grady, 72, a World War II hero decorated with the Navy Cross, credit the baths with Sally's recuperation after a disabling car accident in 1969. Sallye's doctor recommended she visit the city. They came, they bathed, they were conquered. They've lived in Hot Springs ever since—and have their own gift and beauty shops. "The heat and water are soothing and bring blood into knotted-up areas," Sallye says. "Sure, you could say it's all psychological. But you couldn't psych up your mind that strong." Grady agrees: "We get the hot water right out of the springs and keep it in the icebox. We drink it, cook with it, even make coffee with it."

Long before Hernando de Soto came upon the springs in 1541—he was searching for the gilded riches of El Dorado—Native Americans held the waters sacred. Rival tribes of Crow, Quapaw, Choctaw, Black-foot and Sioux would call truces and converge on the Valley of the Vapors—a healing mecca of steaming mud baths and 143°F pools.

But it was the guilty riches of gambling, four centuries later, that built Sin City. Rival tribes of Chicago good-fellas would call truces to gamble—illegally, but with the blessing of venal local pols. Alvin Karpis, once the FBI's Public Enemy No. 1, put up at the flattery brothel; Al Capone took over the Arlington hotel. Gangsters notorious for rubouts up north would gather for rubdowns in the spas of Bathhouse Row. The baths (cooled to 100°F), hot packs and steam cabinets were prescribed to retard syphilis, ease arthritis and treat obesity. "Them was the bad old days," muses Joe McClard's dad, J.D., 69, who remembers delivering barbecued goat to bank robber Karpis. "I got tipped more than the goat cost."

Joe recalls some bad old days of his own—back when Sinatra and Liberace headlined at the Vapors and Southern Club casinos and he parked high rollers' "monster Buicks" and earned $30 a night. "Any gin, vodka or whiskey left on the seat, he says. "we'd pour into this gallon jug al the lot. By night's end we had a half gallon of raw God-knows-what, and we drank it." By the mid-'60s wonder drugs were in, gambling was out, and Bathhouse Row was dim, damp and all but defunct. Now, despite the vigorous revitalizalion, Hot Springs is lacing the problems endemic lo larger cities: gangs, crack cocaine, even drive-by shootings. The Crips and Bloods, from Chicago and L.A., have reportedly begun to "franchise"—recruit disaffected local kids lo sell crack. There are believed lo be some 25 crack houses, most of them in predominantly black East Hot Springs, barely a quarter mile from the town's art galleries.

"People might say we're overreacting, but sections of this city are living under siege," says Charles Smith. "The police are outmanned. We had more drive-by shootings in '92 than Little Rock. You don't hear about it because they're the work of pretenders emulating what they've seen on TV, and so far nobody's been killed. The community feels an urgency to slop it now."

Smith is fiercely protective of his hometown. During 15 years with the Social Security Administration in L.A., he did community work with gangs. So when he retired three years ago with his wife and son Stephen, now 8, he was determined to apply what he'd learned to the streets he has known since childhood. "Back then, everybody knew your parents," he says wistfully. "If a neighbor saw you out doing something, he'd give you a good whippin' and take you home, so your parents could give you one too. We looked out for each other."

It is the combination of down-home warmth mixed with the town's frontier openness that has inspired a broad spectrum of American Dreamers to relax, enrich or transform their lives there. Jim Gerkin, 67, a retired Iowa businessman who for years had vacationed in town, felt "immediately accepted" once he and wife Marge moved permanently into a home on Lake Hamilton six years ago. "You're not an outsider," he says. "This is a wonderful volunteer community with great pride." Dennis Magee had been a Jacksonville cop and zoo herpetologist in Cincinnati, Sacramento and New York City before opening his cafe five years ago. He says he "fell in love with Hoi Springs and [second wife] Sarah the same time."

His Poetry Night has become a hub for all manner of Arkie bards. Regulars include 88-year-old antique-shop owner Carrie Jamison; saxophonist George Gray, 80, who taught Clinton; Ed Wilcox, 53, who fiddles across the smooth edge of a saw while flexing it to make melodies; and Bud Kenny, 44, an ex-deejay who hiked across America with a dog and a pack pony before deciding to settle in town.

Hot Springs is becoming increasingly cosmopolitan—well, microcosmopolitan. Matt Friedman, 34, quit his job as a Monterey County, Calif., transportation planner to become a rabbi. Ordained in 1991, he now serves Hot Springs' tiny, close-knit congregation of some 50 Jewish families. Jim Dryden, a local potter, has in his hire a Chinese artist named Long Hua, who showed up three years ago—and then won a $20,000 commission to design a fountain to replace one washed away in a flood. "He's got 10 or 12 sculptures scattered around Shanghai," says Dryden. "So we called his brother, and he got on his bicycle, rode all over Shanghai taking pictures of his work and mailed them to us. That was a big factor in winning the job. Long Hua's gonna be famous someday."

That there is a local arts scene at all is due in no small part to the arrival in 1988 of the celebrated Benini, an Italian artist whose one-man shows of brilliant blue-and-red acrylic 3-D illusions have traveled all over Europe, Canada and the U.S. Born near Bologna, Benini, 51, had searched for an artistic haven for years, spending 14 years in the Bahamas ("my Gauguin fantasy") and a decade ill Orlando that "led me up with population growth." When his wife, Lorraine, booked an exhibition in a Fort Smith museum, Benini shrugged: "Where's Arkansas?" But when they drove through the Ouachitas to Hot Springs, the Beninis had, he says, "a revelation. We found crystals in the fields. We saw this amazing ancient town. Neither Montecatini in Italy nor Baden-Baden has the beauty, the impact of Bathhouse Row."

Benini promptly tested the waters—with an $8.75 thermal bath. ("In Italy, $300 for half a day at a spa," he sneers.) Next, he and Lorraine savored brunch at the Arlington. "They cut smoked salmon thick as roast beef. I gorge myself, and the bill comes to $22 for two. I said, 'Lorraine, that's it.' It was paradise." He bought a 10,000-square-foot 1886 building for $45,000 and restored it for his home, studio and library. Soon other gallery owners and artists would follow. As did unexpected visits from on high.

One day, Benini says, he was "hammering away, filthy, in my studio," when the front door opened, and Bill, Hillary and Chelsea Clinton walked in, unannounced. The Governor, in running shorts, peered at framed posters and then chatted about art for 90 minutes. Benini was impressed: "There was never a waste of pleasantries. No jokes. He was grateful for what had taken place and asked how lie could cooperate.

Now the Beninis and other residents of Hot Springs are in the throes of what they hope will be a prolonged renaissance—bathing in the glory of a favorite son whose odyssey from the Ouachitas to Washington, D.C., has touched them all. For Hot Springs once was about gangsters and gambling. Now it is where someone can grow up to be President.