John Meenehan ran a country-style hardware store in Georgetown for 48 years.

Meenehan was not just a merchant. He was a friend of some of the city's leading citizens, including Rose Kennedy, to whom he once sold a pair of silver-plated trimming shears.

Today, 78-year-old John Meenehan maintains stores in Falls Church and Reston. He's not bitter; some of his Georgetown customers, like Mrs. Marshall Parks, 63, have remained loyal to him. "He gives such good service," says Parks, who continues to order all her household items from him.

That kind of testimony makes Meenehan wish he were back at Potomac and M streets, his Georgetown business home until two years ago.

"Six months before my lease ran out," he said recently, "I heard rumors the building was up for sale. I went to the landlord, who assured me he had no intention of selling it. Then I got a letter announcing that the rent was going up to $7,500 a month.

"My rent at the time was pretty low, $1,500, and an increase was not unreasonable. I offered to double it but the landlord said, 'John, I have a tenant ready to move in just as soon as you move out.' I understand the building has been sitting idle for two years."

Yes, but not for much longer. The landlord, Paul Lee Sweeny, a Virginia attorney, has leased the site to a pizzeria and bagel shop. As for details about his business relationship with Meenehan, Sweeny would only say, "I don't wish to discuss it."

Georgetown's reputation for quaintness and village character was built by its John Meenehans, merchants who ran specialty shops and were on a first-name basis with members of the community. Like Meenehan himself, many of them are gone.

"Georgetown is no longer a neighborhood," says Katharine Sullivan, an Advisory Neighborhood Commission 3-A commissioner and long-time resident. "Hawk Welding, Woolworth's, Magruder's, Tribble's Silver and Jewelry, Meenehan's -- they've all vanished."

No single factor accounts for this change. Inflation, high interest rates and property taxes and the fact that Georgetown is still an attractive location for new retailers have driven rents up so high that the "little" merchants are being squeezed out.

"Ten people are waiting in line for every retail vacancy," notes Mary Vinton, owner of Georgetown Leather Design.

Establishments that have shown to be immune to the vicissitudes of the economy are the restaurants, bars, shoe stores and other high-markup businesses. That worries Ann Satterthwaite, vice president of Citizens' Association of Georgetown and an urban planner: "M Street is one franchised restaurant after another."

But Jim Weaver, owner of Weaver's Hardware on Wisconsin Avenue, believes Georgetown still "reflects quality and good taste."

Van Wall hopes that's true. Wall, in a partnership that owns Wall's Grill, has recently moved into the site near Wisconsin and M vacated by the Publick House restaurant. "My rent is $8,500 a month and I pay $1,000 a month in taxes," he says. "If I don't do $1.5 million to $2 million a year, it's not worth it."

Of his own landlord, Sam Levy, Wall says, "He is one of the best."

Levy, who with his partner John Snyder owns a considerable chunk of commercial real estate in Georgetown, bristles when he hears criticism about "greedy landlords."

"We've kept out the lip readers and the palm readers," says Levy. "We've been very selective about our tenants and sometimes we've left property vacant because we didn't want certain types of businesses in there."

"Rents never drive anyone out of business. Not doing business drives people out of business," says Courtney Lord, an executive with Western Development Corp., which is developing Georgetown Park, a 105-store enclosed mall south of M Street near Wisconsin Ave.

The $50 million project, scheduled to open in late September, will have eight restaurants and many "name" retailers such as Abercrombie & Fitch, Cache of Miami and Mark Cross of New York. It has drawn mixed reactions from local merchants, some of whom think it will drive rents still higher and others, such as Wall, who hope that the added pedestrian traffic will give a boost to their businesses.

One store that is no longer doing business in Georgetown is Woolworth's. A fixture on M Street for four decades, Woolworth's vacated its premises last January after receiving a tremendous rent increase. Negotiations with the landlord went right up to the 11th hour, says the company's district manager, Edward Weiss.

"The landlord could have come down 50 percent and we still wouldn't have been able to meet his terms," says Weiss. "We would have been willing to break even just to stay in Georgetown. We felt very badly about leaving."

So did a lot of local residents, particularly students and older citizens, who used to call the store by the hour to complain during the closing weeks.

"We got angry calls from people who had been shopping there for 25 years, asking, 'Where am I going to go?' They felt abandoned," he says.

John Meenehan understands their frustration. "I knew everybody by name," he says. "All the chauffeurs would come down to purchase garden tools and bulbs. I'm sad. Georgetown was a nice place to be."