HEDRICK, IOWA -- From a distance, this tiny farm town seems to dissolve into the cornfields; only the two-story, red brick school building rises above a vast landscape of soil and stalks. The century-old school is one of a handful of institutions -- the bank, the grocery, the coffee shop -- that define and bond the community.

So residents of Hedrick were devastated last fall when the state ordered the town to close its only school and send its children to a neighboring district. After years of watching much of their Main Street shut down, they fear that the school closing could finally unravel the town, accelerating its decline into nothing more than a collection of houses.

"In a town like ours, your school holds your community together," said Bill Mosbey, who is mayor of Hedrick, population 810. "When you lose the school, you lose social contacts you'll never regain."

Like other rural towns with falling populations, Hedrick has vowed to fight to save what remains of its three-block Main Street. But some demographic experts argue that towns like Hedrick should abandon such battles, not only because they probably will lose but because in the process they could hasten the demise of neighboring small towns as well.

New figures from the 1990 census show that losses in this part of the Corn Belt have been among the highest in the country. These statistics give urgency to the arguments of many sociologists and government planners who contend that small towns, instead of struggling to remain self-sufficient and competing with neighboring villages for new business, must adopt a more regional identity.

Such towns are being advised to let go of some of their venerable institutions and tie their fate to that of their neighbors -- merging schools, sharing health services, utilities and libraries and promoting themselves as multi-town communities. Survival, they are being told by planning experts, requires a kind of "economic triage" -- the targeting of limited government resources in a way that allows some communities to survive while others are left to decline or die.

"It's logical," said Harley Johansen, chairman of the geography department at the University of Idaho. "We have too many small towns for today's rural economy. They simply can't all survive."

This kind of talk does not sit well with the residents of Hedrick, who feel they are losing control of their future to powerful, outside forces. They resist the notion that their best hope is to become a satellite of some brighter star, or that outside agents should determine where to bestow the benefits of centralized facilities.

"All this regionalization we're talking about," said Hedrick school Superintendent Roger Younkin, "they're going to resist it every step of the way. It's community pride." Remembering Old Downtown

Hedrick, like hundreds of other farm villages in the Corn Belt and Great Plains, was established a century ago on a railroad site. People here remember when the now-diminutive downtown -- with several bars and restaurants, grocery and drug stores, a doctor and two banks -- was a vibrant social scene.

"Friday and Saturday nights, it was like Christmas at K mart," said Lee Spores, who runs the only grocery left in town.

But this cherished image of rural America is disappearing. All around Hedrick are small towns with boarded storefronts in the shadow of abandoned, ghostly grain elevators, villages with no more commercial life than a convenience store on a nearby highway.

Such scenes are the result of a massive population movement out of the vast central reaches of the country. Rural and small-town counties in the central Corn Belt lost nearly 7 percent of their population over the past decade, according to the 1990 census.

Among Iowa towns with populations of less than 500, 88 percent declined over the past decade, according to Agriculture Department demographer Calvin Beale. Keokuk County, where Hedrick is located, lost more than 2,300 people since 1970, nearly 17 percent of its population at a time when the nation as a whole has grown by 23 percent.

Most of this decline is caused by the departure of young people, heading out of state in search of better economic opportunity. But other factors have also hurt.

The severely weakened farm economy of the early 1980s reverberated through these small towns, where businesses exist primarily to serve the farmer. Over the past decade, farm consolidations became widespread, many rural manufacturing plants closed and young people increasingly drove long distances rather than patronize the local businesses.

Now, said Mosbey, who has been mayor for 10 years, "the thing to do on a weekend is jump in your car and go to Des Moines to the mall."

The fundamental changes brought by the last few decades crystallized in the school closing, an event that, although discussed for years, hit with unexpected emotion. In ordering the closing, state officials contended that the school failed to meet standards in the number and variety of courses it offered, among other things.

Many of those involved agree that the problems were largely a result of declining population. School officials said that, with only 200 students in kindergarten through senior high, it was impossible to offer and fill a full slate of courses, including advanced science and mathematics. Of 18 seniors, for instance, all but six opted for early graduation in December.

In the fall, Hedrick's students will attend the Pekin school, about eight miles to the east, where the combined new enrollment drawn from several neighboring towns will reach about 800.

While many in town can accept in principle the wisdom of merging schools, there is still a strong sense that, for Hedrick, the loss of the school will be painful, economically and psychologically. Some worry that the lack of children and parents coming through town every weekday could push other businesses over the threshold.

No longer will there be a rush of children into Spore's market every afternoon for candy and soda pop. And 40 school employees must now look for work elsewhere, exacerbating the population loss.

"It will hurt, you know it will," said Majorie Rouw, a resident of the town for 25 years, as she trimmed meat behind the grocery store counter.

Beyond the economic impact, the school closing has dealt a blow to the town's sense of confidence and character. The football program was abandoned two years ago, a victim of falling enrollment, but the boys' basketball team was still the pride of the community. Hundreds turned out for the team's last game a few weeks ago. The order to send the schoolchildren to the Pekin district, a traditional rival in school sports, left a bitter taste. 'We Need Each Other'

Such resistance is not unexpected, but those who promote regional solutions are convinced that small towns have no real alternatives.

"You have to break down those old feelings of sports competition," said Debra Flanders, coordinator of a nonprofit economic development group in the county. "We're all in the same boat. We need each other for all of us to survive."

Flanders's group is promoting a regional water system to replace the individual town wells and trying to attract a business to a vacant industrial park in Sigourney, the county seat, in hopes it would employ people from small towns in the county.

Across Iowa, as many as 90 regional organizations have sprung up in recent years -- last-ditch efforts to promote business, tourism and shared services. And one-quarter of the state's 430 school districts have entered arrangements in which they merge schools or share programs, teachers or administrators.

But academics say such consolidation efforts often are not enough and governments must make painful choices about which towns to help and which to ignore. These choices, known in the academic world as triage, are already practiced -- implicitly or explicitly -- when housing grants, highway funds and economic development aid are directed to communities judged to be viable. They are "not about turning your back, but making investments in places where investments will work and multiply," said Mark Lapping, dean of the faculty of planning at Rutgers University.

The residents of Hedrick say they recognize that some fundamental changes are inevitable. When patrons of The Country Barn gather for coffee each afternoon -- men sitting at one table, women at another -- it is all too apparent that there are few young people in town.

Hedrick long ago gave up its street cleaner and marshal for lack of funds and now relies on a county sheriff. Mayor Mosbey estimates that as much as 70 percent of the town commutes to factory jobs in nearby cities.

Some here point with half-hearted optimism to a new cafe scheduled to open on Main Street any day. And everyone agrees that Hedrick has a well-organized core of town leaders, determined to force life back into the community.

But the leadership is aging and few in the next generation are available to take up the fight, acknowledged Mosbey, 59. The town cannot compete, he said, with the economic forces pushing young people to move elsewhere for work.

"I can't see any future here for them," said Mosbey, who moved to Hedrick 19 years ago from a nearby town. "I hate to say that, but I don't see what would hold them."

He doubted that either of his two grandchildren, age 9 and 11, will ultimately live in the town he has fought so hard to save.