Richard E. Steen is the former proprietor of a highly successful retail institution here that was started in what today is called Washington's old downtown.

The company, Lewis & Thos. Saltz, recently was sold to new owners. But Steen remains active as chairman of the firm's executive committee. And, as would be appropriate for a man often called "Mr. Downtown" by his friends and associates, Steen continues to worry about the fate of the capital city's downtown retail district.

With the advent of 1978, however, Steen will be out of one of his many local business and civic jobs - that of secretary of an organization called Downtown Progress.

Established in 1959 with a goal of helping to reverse the economic erosion of a 403-acre area bounded by Pennsylvania and Massachusetts Avenue and 5th and 15th Streets NW. Downtown Progress (its formal name is National Capital Downtown Committee) is being disbanded.

Although one business owner said the group is "now superfluous," this would hardly seem the time to abandon a venture designed to aid a very sick core of unusually affluent urban area - a depressed retail marketplace that is not unique in an America that drives to suburban malls for the bulk of its consumer buying.

But this downtown is different because it's located between the White House and the Capitol. The deterioration here in recent decades has made a mockery of commitments by successive adand Kann's - failed in recent years, nation's central cities.

If there is not enough talent, enthusiasm and money to receive a downtown district in the center of government of the richest nation, where is it possible?

Washington's old downtown began to decline as this area's premier shopping center in the late 1940s. Downtown Progress itself was formed on July 1, 1959, wiht a promise of White House help and a warning by city business leaders that time was out for maintaining the economic vitality of a small section of the District, but one which provided 20 per cent of annual property taxes.

The deterioration, which internsified after the riots of 1968, continues to this day with downtown department store sales in 1977 trailing the level of last year. Two major retailers - Lansburg's and Kann's - failed in recent years. Many smaller firms closed or moved to far away places. Stores and offices along Connecticut Avenue and K. Street have become a "new" downtown.

This Christmas season has not been a banner year for downtown merchants, even if the suburban malls are full. City police officials say the traditional shopping rush did not take place.

All of which raises the question: Why dissolve Downtown Progress as 1978 begins?

Steen provides some perspective. "The general overall downtown area looks much better today than 20 years ago . . . Now we have the first beginnings of revival, 20 years ago it was going the other directions."

Adds Knox Banner, who headed Downtown Progress for all its 18 years as executive director, "Sufficient momentum has been achieved to be assure revitalization of downtown between the White House and the Capitol," with increased attention on the part of business groups and public agencies.

In particular, Banner mentions the Metropolitan Washington Board of Trade, which has decided to assume some of the work done in the past by Downtown Progress.

R. Robert Linowes, incoming Board of Trade president, confirms that Robert N. Gray, planning director of Downtown Progress, will move over to the area's largest business organization to head an intensified program of promoting downtown Washington. Gray will take with him the records and files from Downtown Progress.

Asked how suburban members of the board will react to a decision to promote the central city, Linowes says, "A sick downtown doesn't make for a good Montgomery County . . . segments make up the whole and affect the whole [metropolitan area]."

In addition, the District government is about to launch a new business and economic development agency - the last area jurisdiction to take such a step. Informed sources say a leading candidate to become the city's first economic development director is none other than Knox Banner.

If Banner is selected for the city post and if the Board of Trade continues the behind-the-scenes work of Downtown Progress, one might assume that dissolution of the non-profit organization only amounts to a transfer to the public sector of promotional work previously paid for by local businesses (some $3 million to finance Downtown Progress since it was started.)

In fact, the rising cost of memberships in many local groups was among the reasons why the executive committee of Downtown Progress recommended dissolution of their group. Large companies were paying $25,000 a year and smaller firms were paying several hundred dollars annually to Downtown Progress.

But Banner says the main reason is "significant and substantial accomplishment toward the goal of revitalization . . ."

Since 1960, he says, there has been $640 million in private and public development completed in the area; $170 million of additionla private development has been announced; another $230 million is in progress or being planned, including the $110 million convention center near Mt. Vernon Square. Banner forecast that the center finally will receive congressional approval next February.

Among projects Downtown Progress took part in promoting were construction of the subway, the Martin Luther King Library and the F street mall; preservation of Ford's Theatre, the Old Patent Office, old Post Office and Willard Hotel; and approval of federal aid for pennsylavania Avenue redevelopment.

Downtown Progress has the dubious distinction of being a principal promoter of the conversion of a fine railroad hub at Union Station into a costly National Visitory Center without adequate auto parking.

The project was mismanaged not by Downtown Progress but by the federal government. Nevertheless, a rail center was doomed just as the energy crisis led to a revival of rail travel. The government now is seeking to make Union Station a better transportation complex by spending even more money.

Many of these Washington projects were included in an "action plan for downtown," published by Downtown Progress in 1962. A new blueprint for the D.C. government's development agency continues the focus on downtown as the single most significant future job and business growth district for the city.

If Banner moves from Downtown Progress to the District Building, he will find on his desk a copy of the development plan, approved by Mayor Walter Washington last month as a guide to economic decision making. Banner may change hats but his job will change much and the work of Downtown Progress is likely to continue.