As Sol M. Linowitz noted last week, in an understatement, "We have just beeen through a very difficult period in this city."

The former Xeron Corp. board chairman, now a Washington lawyer, took time out from his current preoccupation as U.S. co-negotiator of a new treaty with Panama to assess the future economic health of Washington, the economically depressed capital city of the richest nation in world history.

In his capacity as president of the Federal City Council, an organization of some members of the city's business establishment, Linowitz detailed a growing economic malaise in the District of Columbia that has not been faced squarely and openly either by government or the private sector:

"We have witnessed an unprecedented shifting of significant governmental powers from federal to local officials, accompanied by a sharp dip in the economy. The advent of home rule, as we know all too well, has made for pulling and tugging, occasionally acrimonious debates and, all too frequently, the surfacing of less than constructive attitudes," he said.

"The District has found itself pitted against the suburbs, the local government against the federal government, the business community against the residential community. Judgments have tended to be harsh, and natural rivalries have been more combative than competitive."

Actually, economic data for recent years do not show a "sharp dip" in the D.C. economy. What they do show is that compard with the rich gains in the suburban counties of Maryland and Virginia, the District's economy has been standing still since 1968, with an annual increase in total output and services of 0.2 per cent (as measured by the gross product of D.C., compiled by Chesapeake & Potomac Telephone Co.'s business research division).

The factors that led to a halt in economic growth within the District have been well documented. The city's population has declined while the suburbs mushroomed in a boom era, with residential expansion in Maryland and Northern Virginia often financed by D.C. based financial institutions. That led retail and wholesale business (the third largest area government sector, behind government and the largely government-oriented service industry) to concentrate on the suburbs, which have become one of the nation's most affluent marketplaces.

Following the urban rioting of 1968, more business fled the city. Subway construction began to tie up the city's streets, leading to a tailspin in business downtown. Today, the city has fewer private employers, flat or declining retail sales volume, a dclining city payroll and indications of further cutbacks to keep budgets balanced, and higher unemployment (8.6 per cent of th work force in April, and much higher for young black residents, compared with 4.9 per cent for the area as a whole and with 6.9 per cent nation-wide in May).

Citizens and business, meanwhile, are expressing anger about high taxes. While the District has a truly progressive income tax, taxing poor people less than surrounding jurisdictions, the overall tax burden for middle - income and higher - income families (the ones with spending power) is the highest in the region.

For a typical manufacturing company, the type of business needed desperately in the city to cut into the rising joblessness, taxation also is the highest in the area. (See tables, E3).

When Peoples Drug Store, Inc., one of the nation's biggest retail drug chains, moved its headquarters and warehouse and more than 500 jobs from the District to Alexandria in 1974, the city government had nothing to say. In recent years, as Marriott Corp. sought land for locating its new international headquarters, the District government made no suggestions. Marriott will stay in the suburbs will a heaquarters staff of 1,400 person.

The main reason why business leaves Washington and why new firms aren't attracted is the absence of an aggressive program to promote the city, which contrasts with economic development agencies in the suburbs.

A business development office created in the office of the Mayor cleared Congress in March. But as of last week, city officials still were drawing up a job description for the head of the agency. No effort has been started to appoint a director, according to a spokeswoman for the mayor."We have no specific timetable," she said.

In private conversations, many local business people have expressed dismay at what they see as an absence of leadership by the mayor, whom they supported in earlier years. The mayor has declined repeated requests by The Washington Post for interviews on the city's economic situation over the past two years.

Despite evident problems and halting efforts to get started on building a bigger tax base, two recent and innovative suggestios indicated the emergence of new ideas on how to provide the necessary catalyst for an improvement in the local economy.

The first proposal was that of D.C. City Council member Marion Barry (D-at large), who heads the committee on finance and revenue. The committee has established a 535-member "citizens' commission" to lobby intensively with every member of the House and Senate for congressional approval of both a commuter tax and a doubling of the federal government's annual payment to the city. The payment is made in exchange for services and lost revenues caused by the heavy concentration of non-taxable property in the District.

Linowitz made the second proposal in his speech last week. He called on the private sector to create for the first time a special task force, to examine the role of business and government in correcting local economic ills. "It seems clear that the private sector needs to prepare to assume . . . new responsibilities. And to do so, we need to restructure private sector participation in the process of governance," Linowitz told the Federal City Council.

Barry's idea for a citizen committee, "to hound relentlessly the senator or representative to which she or he is assigned . . . a humanitarian effort which will provide the financial means to help assure that home rule works in the District," could be dismissed easily as a gimmick, especially because the council member clearly sees himself as a possible successor to Mayor Washington.

But, in a recent interview, Barry said he believes the lobbying effort will be important in raising the consciousness of area residents about D.C.'s economic problems.

"We will really educate the 535 citizens and give then something very specific to do. This will create a strong cadre of people supporting both (the higher federal payment and commuter taxation)," he said.

Today, he noted, some groups such as the Metropolitan Washington Board of Trade have advocated in general terms and increased federal payment but have not endorsed a commuter tax. Hopefully, Barry said, the new citizen group will add to knowledge and support for both approaches.

As might be expected, some representatives of suburban residents don't think much of Barry's plan. Sen. Harry F. Byrd Jr. (Ind. Va.) said that instead of "hounding" Congress for more assistance, people in Washington "should hound leaders of the D.C. government to end excessive spending."

And Martha V. Pennino, vice chairman of the Fairfax County board of Supervisors, said:

"This is not a realistic approach to the financial problems of the District . . . I feel there should be a meeting of th regional leaders, both the politicians as well as the business community, to discuss possible ways to shore up the economy of the District."

Linowitz appeared to back the Pennino approach in his address last week. He said a number of recent developments have indicated that the public sector - both the federal and city governments - is beginning to "get its house in order."

In an optimistic assessment, Linowitz said, "I think we are at a new point . . . we can begin to sense a new and hopeful spirit in the community - a spirit of constructive programs and institution building. Particularly in the public sector, there is evidence, that priorities are being reordered and that the institutional framework for solving problems is undergoing renewal." Specifically, he cited:

President Carter's task force to study federal assistance to D.C., a group headed by Vice President Walter F. Mondal. Linowitz said the purpose of the group might have been articulated more clearly and its membership could have been "handled more smoothly and sensitively." His reference was to the unhappiness expressed locally that only two D.C. officials (the mayor and City Council Chairman Sterling Tucker) were named to a panel dominated by the Executive and Legislative branches of the federal government.

But, he added, the "simple fact" is that matters under study - whether Robert F. Kennedy Stadium, underfunded pension funds for city empolyees created by Congress before home rule, and federal assistance for the subway - "all involve large amounts of federal money . . . and what could be more appropriate than to have the principal federal officials meeting with Mayor Washington and Chairman Tucker to discuss how those unfulfilled federal commitments can best be realized."

"House District Committee work on recommendations about what the federal government can do to help the city over the next 50 years.

A Natonal Capital Planning Commission study to help define the federal interest - what it is and what it isn't.

After 15 years of "talking and uncertainty," final approval and initial funding for redevelopment of Pennsylvania Avenue NW between the Capitol and Treasury Department.

Planning for a downtown convention center in the Mt. Vernon Square area.

Foster Shannon, president of the Board of Trade, quickly endorsed the Linowitz idea. "The outlook for the District is absolutely great" provided there are immediated solutions to pension debts imposed on the city by Congress and subway funding, "two big caveats," Shannon said.

The problem with the Mondale task force is that it's "like running a business here with a board of directors in California . . . there's no input from the folks that know what's going on."