Back in the late 1920s, stock broker and investment adviser W. B. Hibbs was giving his colleagues fits.

In talking to local investors and business people, Hibbs told them not to buy stocks any more. Stock trading had become just like gambling and something was wrong with the economy, he advised. Partners in the Hibbs firm talked of ways to silence the man who came to Washington in the 1870s and once sold newspapers on 15th Street NW, where a building bearing his name later was built.

Hibbs founded a major stock brokerage and commodity trading firm in 1889, and W. B. Hibbs & Co. later became the first Washington-area member of the New York Stock Exchange.

After the stock market crash in October 1929, many customers of the Hibbs firm never forgot the advice they got and their loyalty to the brokerage could never be broken. Internal criticism disappeared rather quickly.

Things are not so bad today, although the stock market continued on a very weak footing last week and ominous comparisons can be made with economic developments in the past year and those of 50 years ago.

Indeed, the 1982 successors to leadership of the area's oldest major investment house are quite cautious about the current climate. They are bullish about long-term equity markets and they are not out of the stock market completely, but they are not investing much of their customers' funds in stocks at the moment when short-term interest rates are so attractive that "it doesn't make sense to take risk in the stock market."

The company today is called Folger Nolan Fleming Douglas Inc., which has a family tree with two significant roots--the Hibbs company and a separate investment firm founded in 1931 by John Clifford Folger and James Parker Nolan. Folger, Nolan combined with Hibbs in 1953 and offices were consolidated in the old Hibbs building at 725 15th St. NW, built in 1907.

In a coincidence, both Mr. Folger and Mr. Nolan died last year, exactly 50 years after they had founded their business. Each man had been in his 15th Street office four days before he died.

The deaths of the board chairman and president of any business, in such a short span of time, normally would present major problems of corporate restructuring and invite questions about new goals for a different era. But Folger Nolan has faced no such difficulties. Indeed, a new management team at Folger Nolan has taken over and only emphasized anew the company's hallmark as a conservative investment house in a time of economic turmoil.

"Most of our customers have long-term accounts, and they are on the conservative side, mainly interested in long-term purchasing power plus a small percentage of investments in high-growth areas," said 45-year old Lee M. Folger, son of John Folger and new board chairman. Lee Folger has been in the investment business since 1959 and his family is the dominant owner of stock in the Washington firm.

"We have a conservative investment philosophy, and are not interested in highly-speculative, go-go stocks . . . the markets will be increasingly volatile, with big changes in a day or two, and there is a need for constant attention to each customer's portfolio," he emphasized in an interview last week.

Because of these constant changes, Folger said his firm is looking at new investment products for customers to help them maintain the value of their assets and to work on the more illusive goal of increasing purchasing power. "The political scene and climate has the potential for being very positive for business but the deficits are frightening . . . I hope there will be substantive discussions by Congress and the Reagan administration to reduce the deficits, but until that develops, we need to be cautious" in investment of customers' funds, he added.

Moreover, metropolitan Washington offers a special challenge to investment advisers, in Folger's view: "This is a fabulous town for this business because of the large number of two-earner families, and one of the main problems people here face is converting income to assets."

To some extent, this has led to a change in Folger Nolan's emphasis. The investment firm still thinks of itself as aimed at "the top of the market" in Washington. But top of the market used to be measured in the size of assets a customer had. Today, top of the market also is measured by income since many investors or potential investors have large family incomes but not yet the overall assets.

To compete for the business of these Washingtonians and to maintain existing specialties in retail stock brokerage, municipal finance and corporate finance, Lee Folger is joined by two long-term colleagues in a senior management group.

Robert W. Fleming, known throughout the local community as "Bus" Fleming, has been named president to succeed the late Mr. Nolan. Fleming joined the firm in 1948 and became a general partner in 1950; he was added to the firm's name in 1956, when it became known as Folger, Nolan, Fleming--W. B. Hibbs & Co.

The Douglas in the current name of the firm is that of W. Leslie Douglas, a new senior vice president. A broker-dealer since 1946, Douglas had been a vice president of the company for more than 25 years and his name was added to that of the firm in 1971.

Other top officers named include John P. Rodler, senior vice president, secretary and treasurer; and Thomas Roddy, Robert Leahy, H. Montgomery Snyder, Lillian Blucher and James Mersereau, senior vice presidents.

In terms of capital, Folger Nolan ranks first among Washington area investment firms; total stockholders' equity as of last Sept. 25 was $7.3 million. The firm has about 4,000 customer accounts, 80 employes (including 25 registered sales representatives) and just one small branch office in Northern Virginia. Virtually all operations are done under one roof in the old Hibbs building, which is being renovated inside.

Other area investment firms have more customer accounts but Folger and Fleming emphasized they are not seeking "to be all things to all people." For example, the firm does not put its clients into commodities. At one time, Folger Nolan had a membership in the Chicago Board of Trade and it was a big commodities trader in earlier decades. But no more.

Fleming emphasized that his firm's investment philosophy does not in any way mean that only wealthy persons can be served. To the contrary, where some investment firms discourage persons with only small amounts of money, Folger Nolan emphasizes retail activity and seeks all customers. "I have a feeling that for a person with $1,000 to invest, it's more important to him than for a person with $50,000 to invest," said Fleming. "A theme for many, many years" has been personalized service no matter how big the initial account, he added.

For individuals, couples and institutions with substantial assets and income, Folger Nolan established a capital management division in 1978 to conduct research and to manage a broad range of investments. There is a minimum annual fee of $500 for this service and the company says that the benefits of investment management can best be realized where portfolio values approach or exceed $100,000.

Folger Nolan is an active participant in stock underwritings and, periodically, a major investment banker in this area when opportuntities open up. Two of the largest deals in Washington business history took place in the past decade and Folger Nolan was investment banker for both: Joe L. Allbritton's purchase of the now defunct Washington Star and his surprising but successful bid for control of Riggs National Bank.

With more such takeovers and financial institution consolidations taking place in the next few years, Folger said "everything is possible" when asked if his firm would move into other business lines or find itself a target for acquisition. But, he emphasized, "We feel very strongly that there's an important place for locally-based, locally-controlled investment firms in the nation's capital . . . major banks and investment firms should not be just branches of firms elsewhere, with decisions made elsewhere."

His firm has a capital position among the strongest in the industry and since Folger's family controls ownership, his goal of continued independence is assured.