"Billy Bathgate," E.L. Doctorow's elegant and exquisite new novel, contin ues the writer's absorbing chronicle of the underside of the American dream, and he returns here to some of the themes explored in the more experimental "Loon Lake."

This is Doctorow's version of the final months of Dutch Schultz, a Prohibition-era bootlegger, numbers runner and racketeer gunned down in the 1930s by a rival gang.Its narrator is 15-year-old Billy Behan, a street-wise Depression-era kid who assumes the name Bathgate and who caught Schultz's eye with his juggling.

Billy's deepest dream, the American dream - seen in perfectly American terms as "the consequences of a revolutionary destiny" - is to catch on with the gang and wrap some of the "rudeness of power" he so worships in Schultz around his "orphan self."

He slowly does so, and it is Billy's growth in the gang and his own learning, as Schultz's power and life unravel, that provides the moral center of the tale.

Doctorow provides some glorious passages, turning on horse racing, for example, the kind of lyric attention usually reserved for baseball.

Perhaps America's most important writer, Doctorow here keeps alive the social strain of American fiction that began with Hawthorne and Melville and continued through the best of Scott Fitzgerald's work, probing the question of what it means to be an American and to dream the American dream.