Cole Moreton rides the Cyclone and meets the freaks of Coney Island - the original 'greatest show on Earth'

Koko the Killer Clown was making balloon animals and telling us how he had come to this, performing on a gloomy stage by the seaside at the dog end of the season. There were only half a dozen people watching in the decrepit building on Surf Avenue, but none could take our eyes off the four-foot dwarf in the smudged greasepaint, or the warning on his Charles Manson T-shirt: "Don't F*** With Chuck."

Koko the Killer Clown was making balloon animals and telling us how he had come to this, performing on a gloomy stage by the seaside at the dog end of the season. There were only half a dozen people watching in the decrepit building on Surf Avenue, but none could take our eyes off the four-foot dwarf in the smudged greasepaint, or the warning on his Charles Manson T-shirt: "Don't F*** With Chuck."

The little bundle of malice in a grey striped prison cap mumbled that he had been married once, until he caught "a gentleman" in bed with his wife. "I shot him in a particular part of his anatomy," he said. "Not his head." One stubby arm made a dismissive gesture towards his groin. "It was the only place I could reach."

Someone laughed, hesitantly, then shut up. Koko jumped off the small platform, twisted a sky-blue balloon into a phallic arrangement, and gave it to a young blond child whose parents looked uneasy. Then the clown was gone, giving way to the next act at Sideshows by the Seashore. The compere was a cowboy magician who hammered nails into his own head. He introduced a tall contortionist of stunning beauty, dressed all in black, who lay in a coffin-like box as steel blades were inserted, apparently, through her body. Later she danced with an albino python, and took its head in her mouth.

There are many strange things to be seen in America, wriggling in the dark underbelly beneath all that surface conservatism, and there are still few places better to see them than in Coney Island. Once it was the greatest amusement park in the world, attracting a million visitors every Sunday. Now it is an eerie place, haunted by the past, even when the sun shines and the boardwalk and beach are crowded. Some people go there for the remaining great rides, the Cyclone roller-coaster and the Wonder Wheel. Some bathe in the ocean, or watch beluga whales at the classy New York Aquarium. But for someone like me, who loves the manic intensity of fairgrounds and the melancholy tang of seaside towns out of season, and who was raised on the urban gothic fantasies of American comic books, a visit to Coney Island was a pilgrimage.

The resort is on the coast of Brooklyn, and easily reachable by subway from Manhattan as a day trip, but I crossed the East River to stay in a Victorian-era home in Flatbush, where bed and breakfast meant a level of care you just don't get at a boarding house in Blackpool. Pampered and prepared, I took the D train down to Coney Island, where Eak the Freak was waiting to perform.

Eak, a huge tattooed man, came on stage with his head covered by a black silk hood. He had chosen to transform himself into a freak, he said; and pulled off the mask to reveal a face decorated with tattoos of shooting stars, ringed planets, and other cosmic designs. People stared at him on the streets of Manhattan, he said. We did the same, having paid the price of admission.

"This is skin deep," said Eak, a huge fleshy man covered in designs, his clear eyes blazing. "I am human. I need to earn a living, like everybody else." Then he lay down on a bed of nails, and invited a couple from the audience to stand on his stomach, on a nailed platform. The man was muscular and his girlfriend not a lightweight. Both were nervous. When Eak rose afterwards his back was bleeding. He finished the act by sitting on an electric chair and lighting a flame with his tongue. "Can you imagine what my body looks like by October? Think of that next time you eat a McDonald's." None of us felt much like eating anything.

Much later, over a beer, Eak turned out to be a sensitive, articulate kind of freak, whose true calling was to write poetry. His father was a lawyer in Mexico City. When paying customers came into the room he pulled the black hood back over his head.

"We like to think this is the national centre of American Bizarro," said Dick D Zigun, the Yale graduate, playwright, lecturer and performer, who started a charitable theatre group called Coney Island USA 20 years ago. "What we are doing is a little bit lecherous, inebriated, adult. This is not Disneyland."

They used to call it honky-tonk, the sexy, sassy, sleazy spirit that danced among the crowds when Coney Island was at its peak. The rich and famous found the place first, heading out of New York City to eat clam chowder and swim in full-length woollen suits. Dickens and Walt Whitman were among them. Hotels, race tracks and amusement parks were built, and the world's first roller-coaster, the Switchback Railroad, opened in 1884. The first hot-dog was served there, too.

By the 1920s, when the new subway brought the working classes out of the city, the beaches were so crowded that there was no room to sit down. Many of the visitors were immigrants who had seen the Wonder Wheel and Parachute Drop rising above the shoreline as their liners approached the Verrazano Narrows. Coney Island was the Nickel Empire, where shooting galleries, freak shows and rides offered cheap, sensational diversions. Barkers, hustlers, fortune-tellers and prize-fighters demanded attention, the neon lights were dazzling and the smell of fried food was overpowering.

After the Second World War the neighbourhood went downhill fast: some of the parks went bust, others burned down mysteriously. The shanty towns were cleared and replaced with ugly apartment blocks that made the coastline look like down town Moscow, which must have been a comfort to the many Russian immigrants a few stops down the line at Brighton Beach, otherwise known as Little Odessa.

Coney Island became a nightmare, known more for guns and arson than for good times. The desolate parks and burned-out roller-coasters were a perfect setting for the 1979 gang odyssey movie, The Warriors. The sideshows had vanished, but their dark spirit was preserved in the comic books of the time, whose superheroes and villains were usually freaks and outcasts; their battles often took place in abandoned fairgrounds out on the Island, where Gotham met the ocean. Later these cult visions would become part of the mainstream, most notably through the film director Tim Burton, whose Batman fought killer clowns, death-dealing acrobats and a Joker whose smile was burned into his face by acid. Lou Reed wrote a song called Coney Island Baby that once seemed to me the coolest thing a boy from East London had ever heard. These days fashion designers, film-makers, and the arty types of Greenwich Village love to take a trip out to see Dick Zigun and his friends run the last remaining example of an American art form that was once ubiquitous: the 10 in 1 show, a combination of freakery, magic and vaudeville as specific in form as Elizabethan tragedy. Theirs was a very knowing, ironic version in which the audience was challenged by those whose kind were once exploited.

Some of the laughs were genuine and easy, but the final act was the Freak Show Hall of Fame, a video showing a hideous gallery of former attractions including Siamese twins, hugely obese ladies, men with melted faces, pinheads, human gorillas, and babies with no arms or legs. Watching it in an enclosed room made me feel sick, dirty, and thirsty for fresh air. But then the combinations of fear and exhilaration, gut-busting laughter and paranoia have always been what Coney Island was about.

The so-called funny face that Zigun used as his emblem was first drawn 103 years ago for the Steeplechase amusement park; and, like so many fairground faces, it had an expression somewhere between pleasure, pain, and axe-wielding dementia.

After the show I wandered the four blocks of amusement parks that had once inspired so many imitators around the world. In recent years the place has started to improve again. The Cyclone is still genuinely terrifying, not least because of the creaking sounds from its wood and metal skeleton, and the clanking of chains that pulls the cars towards a summit. There were stars and tears in my eyes before we reached the end of a violent ride; and the sudden, irrational compulsion to do it all again.

The fairground music had changed over the years, from the music hall songs, jazz, then rock & roll of the past, to the bittersweet, bass-heavy thump of modern R&B, but some things were the same. You can still buy thick, juicy fried shrimps on the boardwalk, or the solid Jewish potato cakes called knishes. The original Nathan's hot-dog stand, where the most famous dogs in the States originated, still has long queues, although the food itself was woeful.

From the top of the Wonder Wheel, as my cage swung wildly in the wind, I could see derelict land all around the Bowery, and the beginnings of a new baseball ground being built. One day soon the big entertainment corporations will realise what they're missing in Coney Island, which remains the playground of the working classes, the kooky and the thrill-seeking. They'll move in, clean it up, install state-of-the-art rides and force us all to wear smiley faces.

Go there soon, if you can, before it's too late.