Mix together hamburger, egg, milk and Italian bread crumbs. Roll hamburger into 1 inch balls. Bake at 375 degrees for 15 minutes or until meatballs are browned. In a medium saucepan, mix together chili sauce and grape jelly. Simmer mixture on stove top until jelly is melted. Pour sauce over meatballs and serve immediately or place in crockpot on low for 4 hours.