Correspondent Betty Ann Bowser reports from Jasper, Texas, about a racially motivated murder and how the small town is trying to cope with the controversy.

BETTY ANN BOWSER: In Jasper, Texas, folks are mending fences by tearing one down. It was just a small, wrought-iron fence, but for more than 100 years it had separated the graves of whites from blacks in Jasper's cemetery, and people in this East Texas town of 8,000 recently decided now was the time for the fence to go.

BETTY ANN BOWSER: The ceremony came eight months after a brutal murder that catapulted residents into months of deep soul-searching, and asking themselves what their real feelings were about race. Last June, three white men were charged with chaining a black man, James Byrd, Jr., to the back of their pick-up truck and dragging him to his death. The case got international attention and became a flashpoint for the state of race relations in America because, it was alleged, Byrd was murdered for being black. The case also shocked and shamed the people of Jasper.

WOMAN: Everybody was just shocked in disbelief. I mean, people were just crying in the streets.

MAN: It was like goodness, gracious, mercy, can this happen in our community? Can we have something that is this brutal happen here?

BETTY ANN BOWSER: Now, as one of the accused killers goes on trial, the town continues to look at its own feelings about race. The removal of the graveyard fence last month was part of that effort. Jasper resident Margena Gardiner came to watch.

MARGENA GARDINER: What really moved me is I was born into a segregated world. And all my life we've been fighting against segregation, I didn't want to be buried here, and all my efforts that I've lived for would be for naught because I'd be buried in a segregated graveyard. Now it's changed in this graveyard -- if we could change the hearts of men the same way, you know, if they would pull their roots up and start afresh.

BETTY ANN BOWSER: At first, it didn't look like there would be a fresh start.

KU KLUX KLAN DEMONSTRATORS: (shouting) White power!

BETTY ANN BOWSER: Within days of Byrd's murder, groups like the Ku Klux Klan descended on Jasper.

KU KLUX KLAN MEMBER SPEAKING TO CROWD: This is Klan country, has been Klan country, and will be Klan country from now on! To hell with the Negroes and their special programs and their affirmative action.

BETTY ANN BOWSER: The new Black Panthers marched through the streets.

BLACK PANTHERS MEMBER: We say to the Ku Klux Klan and we say to the White Aryan Brotherhood, we hope that you are as willing to die as you are as willing to kill.

BETTY ANN BOWSER: But almost as quickly, the family of James Byrd, Jr. pleaded with people to look for healing, not revenge. Clara Byrd Taylor, Byrd's sister, is a middle school teacher.

CLARA TAYLOR, James Byrd's Sister: We didn't want anyone to retaliate for my brother's death. We recognized that what had had happened to him could serve as an igniting point, whereas other organizations could use this as kind of a springboard to their activities, and a lot of those activities were involved in violence, and we didn't want that.

BETTY ANN BOWSER: Still, news crews from as far away as Australia swarmed the streets, creating images of Jasper as a redneck, racist town. Mike Journee has lived in Jasper all of his life. He is editor of the town's twice-weekly newspaper, ''NewsBoy.''

MICHAEL JOURNEE, Editor, Jasper NewsBoy: We were getting news clips and everything from all over the world coming across our fax machine, people were sending us all kinds of stuff, and one of them was a London tabloid and it, on one side of the page, it had a picture of Billy Rowles in his cowboy hat -

BETTY ANN BOWSER: The sheriff.

MICHAEL JOURNEE: The Sheriff, Billy Rowles, the sheriff, in his cowboy hat, and on the one side, they had a picture of Byrd. And in the middle, they had this big, 100-point headline that said "The Town That Shamed America." The sensationalism of the headline and that kind of thing, that really is what people came here looking for.

BETTY ANN BOWSER: Residents were thunderstruck by such characterizations. This is a town that is 40% black; the schools are heavily integrated; and many of its leaders are African American. Like most white leaders in town, Charlie Nicholson, a local restaurant owner, and his wife, Nancy, a city councilwoman, were stunned. He had thought race relations had been going along just fine.

CHARLIE NICHOLSON, Restaurant Owner: At this time we had a black mayor, we had a black city council men, DEDCO, which is a division that distributes the funds, you know, the federal funds for 15, 16 counties had a black leader; we had just recently had an election change of a black school board president that had been here 15, 16 years. We had a black hospital administrator. We are not in quotes a racist society.

BETTY ANN BOWSER: But Clara Taylor said the racial nature of the crime and its brutality were why it attracted so much attention.

CLARA TAYLOR: This was not just a crime against my brother, against my family. It was a crime against humanity. We thought we had come so far. And yet, we have this vicious killing taking place. It shows that we had not come as far as we thought we had come as far as race relations are concerned. I think it awakened in me, my family and others that hatred and racism and all these terrible evils of a society are still out there. And we need to do something to work against it.

BETTY ANN BOWSER: As part of that work, residents gathered and held hands in a courthouse vigil. They set up a task force on race relations, and they held diversity classes for teachers. At town meetings a split became evident. Whites talked about how good race relations were, but blacks spoke about more subtle examples of racism.

UNAV WADE, Beauty Shop Owner: Well, one of the reasons why she was so poor, though, is because her grandfather was a slave.

BETTY ANN BOWSER: Unav Wade is a local storyteller and businesswoman who attended the community meeting. Wade is acutely aware of race. She spends a lot of time talking to schoolchildren about her grandfather, a slave, and how people can succeed in spite of their race.

UNAV WADE: Everybody would wash in the same pan in the morning.

BETTY ANN BOWSER: While she says race relations are better than they were in 1976, when she opened the first black business in the white section of town, racism still exists.

UNAV WADE: Somebody call on the phone and said where is your beauty shop located? Well, they assumed that there's no black beauty salon in this part of town. So they feel pretty safe, you know, to call a beauty salon, even though they don't know it, depending on what part of town it's in. So, she said where is your beauty shop located? I said it's 127 West Houston. And she called out to whomever she was talking to, and she said it's down there on 127 West Houston Street. And she said - and I can hear the lady in the back - oh, that's that nigger shop, we don't want to go there. So I mean, you know, she -- maybe she didn't know I could hear here, I'm pretty sure she didn't know I could hear her. But you have to face things like that all the time.

BETTY ANN BOWSER: Stories like Wade's began to multiply when the mayor's task force sent out race surveys with utility bills. Residents were asked their opinions on the state of race relations.

NANCY NICHOLSON, City Councilwoman: What this did is bring reality to the forefront, that for many of us had not allowed it to come forward, because we were doing okay, and you just don't want to hurt anymore. You don't want to have to really deal with these kind of issues all the time. Black folks in my age in the 1950's and 60's, we really had a hard time. And, you know, we are trying to heal. Even though we're still working for the cause, but there's a lot of pain that goes along with that.

BETTY ANN BOWSER: For white residents like Nancy Nicholson, confronting community attitudes about race was gut-wrenching.

NANCY NICHOLSON: We learned that the hurt was so deep. And the wound was so deep in the black community, that we did not know - and a lot of the white community thought that there was no problem and while we are so far ahead of most southern cities that I know, it was that underlying personal, in your heart, are you thinking better of yourself because of the color of your skin? And it is - it's real. And I think when this happened, it kind of plowed up all that in our hearts, and we realized that there was prejudice. Some of the things that people would say at the meetings were when you give me my change back at a grocery store, you don't touch my hand; you lay it down; am I not good enough for you to put the money back in my hand? Little things like that.

BETTY ANN BOWSER: It's those little things that newspaper man Journee says will lead to bigger, more important changes.

MICHAEL JOURNEE: That this has made Jasper residents much more conscious of the way they treat one another. I know it has changed me a lot. I've also learned that you can bounce back and maybe even take a step forward, you know. That's what I think Jasper did. We took a hit and we stepped back for a second, then we took a couple of steps forward, went beyond where we were when this thing happened.

BETTY ANN BOWSER: Jasper residents says they'll continue their dialogues about race. Meanwhile, Jasper is painting the best face possible on the town square where the first of three trials began today, and the family of James Byrd, Jr. has started to raise money for a foundation in his name. Its goal will be to improve racial understanding.