Out East, Santa Fe is hot. You can't turn around without running into magazine articles raving about Santa Fe or ads displaying fashions of the Southwest or some friend telling you Santa Fe--not Key West or Aspen or Ketchum, Idaho--is the place to be. Out here in the land of oceanic sunsets, Indian antiquities, Hispanic missions and adobe architecture, the residents are both tired of all this publicity and a little amused by it.

On a Tuesday evening, the Santa Fe arts establishment has gathered in the basement of a local hotel for an auction to benefit the annual arts festival. There are no tourists here, for this is part of Tribal Santa Fe. Various non-artists have donated works of so-called art and everyone is throwing money at them. But at one point, the bidding for an odd-looking white assemblage--that's ah-sem-blaj--begins to drag, and the curly-haired auctioneer in the salmon-colored suit, a master at hyping not only the art but the crowd, can't resist tweaking the Chics of Santa Fe: "In New York City, God knows what this would be worth--and I think you know what I mean," he says to an eruption of laughter.

Back East, the merchants have discovered Santa Fe with a vengeance and are relentlessly promoting their own visions of it. Ralph Lauren came here on vacation and returned to New York with his southwestern style. Much of the cosmetics industry is enamored of the earth tones of the desert.

This month Lord & Taylor is turning over its Fifth Avenue store in New York to an extravaganza of the Sante Fe Look in fashion, furnishings, food, art and crafts.

The promotion will include the Santa Fe Face developed by Elizabeth Arden. "It's a very natural look," says Peggy Kaufman, the store's vice president of public relations. "It was easy to do the Nantucket and Charleston faces two earlier promotions of Americana , but for Santa Fe it was much more difficult." That's because there are Hispanics, Indians and Anglos in Santa Fe, and to a makeup artist, those are not exactly similar palettes.

Some local residents think all this chic is ruining the town.

"People came here before because of attitudes and life style," says Nancy Applegate, who owns the Villagra Bookstore here. "It was word-of-mouth. Now they're coming for status and appearances. It's the whole beautiful-people crowd."

You don't have to look very far in Santa Fe now to find the Beautiful People, the Mercedes Benzes in the gallery parking lots, the wealthy tourists zipping through shops looking for a piece of the culture to take home with them.

It seems that everyone wants a piece of Santa Fe. Everyone from the tourists to the newcomers, who impose their own folkways on Santa Fe's, to the media, which periodically storm the city, bite off a large chunk of its culture and then spit it out in a form a native would resent but not recognize. The Santa Feans are restless. You would be, too. Taking Issue With Geographic

Bill Banta, a cheerful man who left his job with an engineering firm in Texas to open an art supply store in Santa Fe some years ago, surveys the crowd at the auction in the hotel basement and turns to a visitor. "You're looking at the real Santa Fe," he says, "rather than what Esquire or the National Geographic writes."

Banta has just spent $2,300 for a bound volume of two months of the local newspaper from 1918, which he says is 10 percent of his annual salary. "I've got nothing better to spend it on," he shrugs.

Someone else has paid $140 for a pen-and-ink drawing by the noted local artist John Ehrlichman. Others have bid on such things as a painting submitted by a local gallery owner under the alias of Georgia O'Greefe, or the Raggedy Ann knock-off with cowboy boots, faded blue-jean vest and skirt, cowboy hat and what is described as "almost authentic jewelry." The arts are very big business out here, and while there is much joking about the submissions and the bidding, everyone here is taking the fund-raiser seriously.

"National Geographic was so shallow," Banta says. "Santa Fe goes much deeper."

National Geographic, which featured the city in its March issue, is on a lot of minds in Santa Fe. It is the latest in a year-long string of articles describing the city in glowing prose, but in image-conscious Santa Fe the reaction was largely negative.

Betty Bauer, an editor and publisher of The Santa Fean magazine and a past president of the Chamber of Commerce, says, "Everyone in town was upset by the National Geographic. We felt it said nothing about the history of Santa Fe, little about our traditions, our events. We were all really dumbfounded."

As is its custom, National Geographic sent advance proofs of the article to city officials last fall, asking them to check it for accuracy. Instead, they denounced it. The mayor at the time took offense at the choice of pictures and pushed a resolution through the city council urging the magazine to get rid of them. The resolution specifically complained about a street scene of people eating French pastries, which the council said could have been taken "Anywhere, U.S.A., Mexico or Canada," and another photo of several young Hispanics and a low-rider automobile, which the council said "perpetuates a stereotype that is not indicative of the true nature of the culture of our community."

National Geographic refused to make any changes requested by city officials, in part because it would have cost $40,000 to pull the offending plate off the press, and it is now rethinking its policy of giving politicians an advance look at articles. "We've looked at that article pretty hard," says Wilbur E. Garrett, editor of the Geographic. "I don't think you can fault the article."

No one officially condemned Esquire magazine for a cover story it ran on Santa Fe last year, but that article was even more offensive to some of the natives because it portrayed Santa Fe as a hip, modern-day paradise. "Great Women, Great Weather and Plenty to Do," said the cover.

"Esquire made Santa Fe out to be very chic," says Linda Durham, a local gallery owner. "It made it seem a very shallow place. It's not, it's where writers come, serious people. It made Santa Fe seem like it's a place where people come to snort cocaine and park their Jags in front of The Pink Adobe a popular local restaurant ."

No one here will admit that Santa Fe is chic. Quite the contrary. "It's no Riviera," says Lee Frederickson, who runs a catering business in Santa Fe. There are no truly great restaurants, no real night life, few of the amenities of a jet-set hangout.

Whatever the amenities, Santa Fe has attracted a steady stream of newcomers. Steven Rudy, a patron of the hotel basement auction, is said to be typical of the people who make up the city's art crowd. He struck it rich in the real estate business in Houston, then abruptly gave it up three years ago to come to Santa Fe. Now he and his wife run a small gallery, although they don't depend on it for their livelihood. "We were fortunate that we earned an income in Houston," says Rudy, elegantly dressed in black tie and concho belt.

Rudy says he and his wife have modified their life style since coming to Santa Fe. "We don't buy as much or spend as much as we did in Houston," he says. "The parties of 100 or 150 that we had in Houston, we don't have here. We can't go to New York for the opening of the new wing, as we'd like to, so we get in our jeep and go up into the mountains."

But isn't it artificial, with so many people living off the earnings of an earlier life elsewhere, he is asked. "You're right," he says. "It's like Alice in Wonderland. In many aspects, it's almost too good to be true."

A Change of Seasons

Nancy Applegate remembers the day things began to go sour in Santa Fe. It was at one of the midweek cocktail parties that mark the busy social life of the community. Applegate arrived from her bookstore dressed in typical Santa Fe fare: boots, jeans, a ribbon shirt and lots of silver jewelry.

"The only non-Anglo was the bartender," Applegate recalls. "I was the only person under 60. And it was all newcomers, people who had been here two or three years or less. Several of them complained to the hostess about my lack of courtesy for dressing the way I was." She shakes her head. "Santa Fe has never been that way."

Applegate's lament is not uncommon in Santa Fe these days, for there is a feeling among some residents that all the attention the city has gotten is attracting people for the wrong reasons.

There is no denying the attraction of Santa Fe, beginning with its natural setting at an elevation of nearly 7,000 feet. There the thin air is addictively fresh and the skies are almost always clear, intoxicatingly blue. The land and sky are an ever-changing contest of color and beauty.

The climate is nearly perfect most of the year, and on many summer nights the air is cool enough to require a blanket for sleeping. There are even changes of season through the year.

Adobe architecture, with its soft edges and earth tones, creates a timeless visual atmosphere in the city. Although true adobe is no longer practical, most new buildings--museums, hotels, the Federal Building and many homes--are done in the adobe style.

In summer, thousands of tourists are drawn by the arts that flourish here. The Santa Fe Opera is nationally known and performs in a striking open-air theater a few miles north of the city. In addition, Santa Fe is known for its chamber music group, its film festivals and theater. There are also more than 100 private art galleries listed in the local Yellow Pages, making Santa Fe one of the major art centers in the United States.

But it is more than the climate and the arts that make Santa Fe so appealing. It is the rich heritage of the Indian and Spanish populations--the annual Fiesta in September is more than 250 years old--and the live-and-let-live attitude of people here that over the years has drawn celebrities seeking anonymity, children of the counterculture seeking solitude and modern-day dropouts looking for a peaceful place to land.

The City's History

What is special to Santa Feans is not necessarily special to the outsiders now flocking here. It is an old city, founded before the Pilgrims landed at Plymouth Rock. Long before that, in the 13th century, Indians migrated to the area and established settlements and farming communities. In 1680, the Indians drove out the Spanish, and 12 years later the Spanish overcame the Indians. The first U.S. citizens arrived in the early 1800s, and in the 1850s Father John B. Lamy was appointed the first bishop of Santa Fe with a mandate to clean up the decaying and decadent Catholic Church in the Southwest. The cathedral he had built stands near the center of town, only a few blocks from what is purported to be the oldest church in the United States, with a bell that is 600 years old.

Santa Fe began to develop as an artists' colony around World War I, but it was still a sleepy little state capital in a state that was still new to the Union. The artists were drawn by the desert expanses, the brilliant blue sky, the simplicity of life, and the sweet smell of pin on trees burning in the fireplaces on chilly nights. The tourists and the galleries came later, as did the counterculture.

Today three cultures--Spanish, Indian and Anglo--coexist in this city of 50,000 situated in the northern New Mexican mountains.

"Santa Fe is special in terms of life style, attitude, in terms of what matters," Applegate says, standing in her small and well-stocked bookstore. "Most of us care about Santa Fe, and we want to share it with people who come. But we don't want it to be Disneyland. People with any kind of ties hate to see it misrepresented, hate to see it become the chic place for reasons that aren't valid, that are just superficial.

"The town is becoming more stratified than it's ever been. There are a group of people who want to be the elite, the nouveau riche types . . . Santa Feans have always been involved in civic and volunteer organizations, but most of the new people are not getting involved in that way. They're not contributing except with their bucks. And I want more than their bucks."

The clash between old and new in Santa Fe is sometimes difficult to take seriously, for it is often little more than a clash of egos in the bruising local art world, a sense of jealousy over the attention certain people have gotten. Forrest Fenn came here nine years ago and now runs a successful gallery. He has had his picture in Esquire and National Geographic, but many people wince when his name comes up. Forrest Fenn, they say, is not typical of the real Santa Fe.

"We're all getting tired of Forrest Fenn," says one member of the local inner circle. "He's a newcomer. He has a cynical outlook toward art that isn't appreciated by a lot of people here."

Fenn's attitude toward art is fairly simple: He's in business to make money and doesn't care who that offends. "The art business is like religion," says the handsome, silver-haired Fenn. "You can lose money or break even, but if you make money you get a dirty name. Artists and art dealers are supposed to be sacred." He adds, "The city is arbitrarily against people who come from outside, even though most of the city is made up of outsiders. You're never an insider in Santa Fe, unless you were born here or have lived here 30 or 40 years."

Fenn happily admits that the publicity he's received is good for business, just as other art dealers and artisans are profiting from all the attention being lavished on Santa Fe. And in the protests about the invaders, there is more than a vague sense that the people already here simply don't want to share the good life they've found.

But there is a more serious side to the way America discovers and discards places and fashions, the way tourists and traders and journalists and art buyers skim the surface of a culture, reprocess it and get rich off it. At Lord & Taylor, for example, certain elemental parts of Santa Fe will be purposely ignored. "We don't get involved in religion or in tribal customs," says Peggy Kaufman. "Maybe we do miss part of the community, but it's hard to tell a New York audience what a Kachina doll was really used for."

And so the hawking of Santa Fe--whatever it has come to represent--continues, if perhaps a bit self-consciously. In one of the exclusive galleries on the plaza, an attractive woman in designer jeans lovingly rubs her hands across an expensive, silver concho belt and looks at her husband standing nearby. "I'm not buying it because it's chic," she says. "I'm buying it because it's Southwest."