“THIS IS MY REWARD for living a good life having rich friends,” Liz Smith says, settling in after a butler-cooked breakfast at the Bel-Air, California, abode of her best friend, director Joel Schumacher. Things do, indeed, look good: Lemons are ripening on a tree in the garden, the slate-lined pool is glistening, and the sky is a smoky Los Angeles blue. Schumacher is away in Acapulco, recuperating from a tough promotional tour for Batman & Robin, so Smith, a perennial houseguest (she has her own room), makes herself at home, collapsing her lanky frame into a leather sofa, her blue eyes a little doleful, her blond page boy a little limp from what could be called too much fun. A week earlier she returned from a Grecian idyll with investment banker Pete Peterson and his wife, public television executive Joan Ganz Cooney; now she’s flown from New York into L.A. to interview Michelle Pfeiffer for Good Housekeeping. “I like to interview people I like,” she says gamely.

These days, it seems, there are few people Smith doesn’t like, and few people who don’t like her. As the nation’s premier gossipwith a syndicated column that appears in sixty papers and nightly appearances on the E! channel’s Gossip Showthe 74-year-old Texan has become as much a celebrity as the people she writes about. Indeed, 1997 has been particularly successful for Smith: She was a hit as a society fundraiser (Brooke Astor gave her $250,000 to expand her new literacy charity, the Liz Smith Fund), she got to reveal JFK mistress Judith Exner’s final secrets in Vanity Fair, she collected $1 million from Hyperion for her memoirs, and she scooped the world on the dishiest celebrity doingsshe was months ahead of other entertainment reporters, for instance, in breaking the news of Jim Carrey’s divorce. She also proved how much impact her column really has. Liz Taylor raves to her about Billy Bob Thornton’s Sling Blade and it wins an Oscar; Demi Moore complains to her about the editing of G.I. Jane and the movie gets recut; TV stars Ta Leoni and David Duchovny let her in on their wedding plans and it makes national news.

But just as Smith has scored on a grand scale, she has come under fire for breaking one of journalism’s commandments: Thou shalt not write about one’s friends. This summer, a few weeks before she bunked at Schumacher’s house, the New York Observer took her to task in a front-page story for labeling Batman & Robin “a cinematic work of art” and “the best of the Batman movies to date.” To some, it was a replay of 1991, when she covered the divorce of Donald and Ivana Trump while remaining pals with both. On such topics Smith is as flinty as a West Texas rancher. “Joel and I never wanted to abandon our friendship to prove that we’re not exchanging favors,” she says. “I’ve got a philosophy of what it is to be famous: People in the press attack me because I’m there. My statistical chance of making an ass of myself is much greater than someone who’s not in the paper three hundred and sixty-five days a year. You get a lot of heat and light for just being there.”

Perhaps it isn’t a case of ethics but of geography. Any Texan who spends a nanosecond with Smith will know her for who she is: the embodiment of the good ol’ girl. She’s always nice (until her mother died at 95, she wrote her every day), always speaks her mind (her language is frequently salted with cusswords), and shines in any crowd (“She makes any encounter a party,” says author and fellow Texan Marie Brenner), though she prefers her own company. She hides how smart she is, too”I work at my intellectual capacity,” she says, after admitting that she devoured the Napoleon biography How Far From Austerlitz? But above all, she always gets her way. “I’ve sung at Carnegie Hall and the Met. I’ve sung with Barbara Walters and Diane Sawyer. I’ve danced with the cast of A Chorus Line. I have realized a lot of my secret Walter Mitty dreams.”

Those dreams were formed in Fort Worth, where, like so many ambitious Depression-era Texans, she grew up knowing that her surroundings were too small. The daughter of a cotton broker who took her everywhere with himyou can’t be a good ol’ girl without being a daddy’s girlshe was a restless child in a staid environment, already smitten with the likes of Greta Garbo, Bette Davis, and Humphrey Bogart. “We were poor,” she says, “but my mother and father sent me to a better grade and high school, so I grew up with all those rich kids in Fort Worth. It gave me a social complex. I was a horrible cutup. My French teacher signed my annual, I’ll never forget my little monkey of the French class.’ I expect I haven’t changed much. I’ve always been outside with my nose pressed against the glass.” She studied journalism at the University of Texas at Austin”the seminal experience of my life”and then, in 1949, lit out for New York City. A friend was engaged to a man who had already moved there; the woman wanted to be with him but couldn’t go without a chaperon, so Smith agreed to accompany her. She had only $50 in her pocket. Her first morning there, she opened the window of her Chelsea hotel room and hollered, “Which way is town?” That night, her friends took her to Times Square. “I found out which way town was,” she says, “and I never thought about leaving ever again.”

She was bright and charming, driven and star-struck. In the early fifties she began carving out a career for herself in a New York ruled by Walter Winchell, then the country’s most famous gossip columnist. Smith worked as a producer for Mike Wallace at CBS radio and as a ghostwriter for Cholly Knickerbocker’s gossip column in the Journal-American. But it was Winchell, with his brashness, his frequent scoops, and his restless imagination, who served as her role model. “I had read him in the Fort Worth Star-Telegram,” Smith says. “I thought he wrote the best column ever.” Later, she saw him hold court at El Morocco, the famous New York nightclub: “He’d say, Hi, kid, you’re doin’ great.’” She learned to imitate his style and saw some version of what she could be. “What Winchell was, essentially, was an entertainer,” she says. “He would go up and dance onstage with Judy Garland, and she couldn’t do anything about it. He was really the three-thousand-pound gorilla.” Eventually, however, the all-powerful Winchell fell. “He believed his own publicity and became a power freak,” Smith says. “He went from being a real champion of the underdog to being a conservative asshole.”

At the same time, coincidentally, her own star began to rise. In 1976 the New York Daily News hired Smith to write a gossip and entertainment column, and the rest, as they say, is history. In the early days she was toughshe reported on Pat Nixon’s drinking, for examplebut before long she was drawing criticism for being too close to her subjects. Her column was funny and fluffy and eclectic, but she no longer had her nose pressed against the glass, it was said. She had come inside the rooma very nice, very cushy room.

And who could blame her? The Algonquin Round Table, Fred Astaire and Ginger Rogers dancing on smoky glass: Smith came of age during what was, on the surface at least, a more graceful time in the life of Manhattan, a period she readily admits is gone. “America is an aristocracy of money now,” she says. And, of course, celebrity, a fact she acknowledges with the grimace of someone who knows she has contributed to the creation of a monster. “We have this overweening obsession with celebrity to take our minds off what’s really going on,” she says. “That’s the only healthy thing about gossip; in a world of real attrition we wouldn’t have time for it. If that time ever comes in America, we’ll be like Richard Nixon: We won’t have gossip to kick around anymore. It’s a manifestation of the leisure class.” Smith isn’t anybody’s foolshe knows she is chronicling a vulgar timebut like any plucky Texas heroine she works hard to enjoy it, establishing her own moral ground among the amoral. To the world, she presents a wide-eyed enthusiasm, but privately she is nothing if not shrewd and self-aware, two qualities that are not always obvious in her column.

Her intimate life is a good example. Twice divorced, she has abandoned romantic entanglements”I don’t have any romantic connections; that’s all over for me,” she has saidand instead invests her emotional stock in friendships. She is usually surrounded by loyalists: an office manager who has worked for her for 30 years, a housekeeper who has been with her for 25 years, and two longtime assistants who have, over the past quarter century or so, become semi-collaborators who keep strangers and sycophants from piercing her privacy. (One of them, the famously protective Saint Clair Pugh”Saint” to Smith’s friendsis aptly named.) Smith makes a point of keeping up with close friendssome from kindergarten, some, like Brenner, from Manhattanthrough daily letters and faxes. She also maintains an ongoing correspondence with many of her friends’ children.

Yet Smith knows she lives in a world in which many relationships are perishable. “I think my instincts are pretty good,” she says, “but I don’t have any hard feelings about people who aren’t of quality. Appreciating a person of quality is its own reward.” In an odd way, Smith has managed to convert Manhattan into a larger version of Gonzales, the small town where she spent much of her early adolescence: She is the sharp-eyed spinster who knows everybody’s business but keeps her own very much to herself, the one who tells people what they want to know and what they need to know. “Hank Luce saw me at a party,” she recalls. “Oh, Liz,’ he said. You’re still writing about all that Hollywood shitit’s so boring.’ I went home, and the more I thought about it, I thought, Hell, I agree with him.’ So I leaven the column with social history and opinions and reality. I write about the things that interest meart, archaeology, booksmore than anyone else does.”

And, naturally, she is nice about it. “Rejoicing at other people’s misfortune is just a phenomenon of the time,” she says. “I can only be what I am. I can only think that my benign approach has worked for me. Rosie O’Donnell takes the benign approach. Oprah takes the benign approach. I think people are getting sick of this mean shit.” Thus, if she prints a story about marital problems between Billy Bob Thornton and his wife, Pietra, she will sooner or later make up for it by promoting Pietra’s Playboy pictorial. Such is what passes for a good deed in contemporary America.

And when Smith is going to be unkind or racy, she sometimes resorts to the anonymous, or “blind,” item”The coward’s way out,” she sayswhich never seems to backfire on her as it does on many columnists. In the midst of sitcom actress Ellen DeGeneres’ coming out, for instance, Smith reported that a major TV talk show star would follow suit. Evidently, she touched a psychic nerve in the homophobic heaven of the stars: Fearing fans would think the item was about her, Oprah Winfrey immediately dispatched a press release confessing her … heterosexuality. By doing so, of course, she paid homage to Smith’s vast reach, as did many others. “Oprah nominated herself, and we weren’t even talking about her,” says Smith. “If I told you all the people who told me they weren’t going to come out, you would die laughing. Big, big starsit’s hilarious.” (She won’t say who; holding out is part of being nice.)

In fact, Smith has made a career of being on the side of the stars; criticism aside, it is, to her, just good business. “Why wouldn’t I be their mouthpiece? The other columns portray them as child molesters, deadbeats, secret homosexuals. I am open to anything these people want to say. Let them talk. Don’t tell me that isn’t more interesting to the reader to hear from them directly.” Recently, Sharon Stone called to complain about press coverage of her romance with a San Francisco newspaper editor, and Smith wrote her gripes into a column. “This is an intimate look into her mind,” she says, “and I’m the only one who’s got her statement. If they want to talk to me, I’m sure willing to let them have their say. I’m the one who has access, and I don’t think that’s a small thing. I spent a lifetime becoming the kind of reporter they would want to talk to.”

As time nears for Smith to leave for her interview with Michelle Pfeiffer, the conversation turns back to wealththis time her own, a subject of which she is pragmatically proud. “I don’t care about the money,” she says. “I never made any money till I started doing TV. I think journalism is the greatest career because you can keep your independence, remain one of the common people, and at the same time have a lot of privileges. But you don’t have to enter that morally ambiguous thing about making lots of money.

“I’ve still got my nose up against the glass,” she insists, waving good-bye from the doorway of Joel Schumacher’s house.