After an ambitious and well-financed effort to make New York-style book publishing a reality in Washington, Adler & Adler is phasing out its operations less than two years after its first books appeared.

The company's president, James Adler, has informed clients that Adler & Adler will no longer be acquiring manuscripts for publication, which means that the last books bearing the company colophon will appear next spring.

"Simply stated, we are putting more into the books we publish than the market is giving back," he wrote to authors and agents earlier this month, "and we do not foresee a change in this imbalance."

Reached by telephone in Paris yesterday, Adler refused to disclose the losses sustained by the publishing house he and his wife Esthy established in 1985, though he told Regardie's magazine last year that $1 million in start-up expenses in the first two years was "not an insane estimate."

In explaining the decision yesterday, Adler contended that the nation's three major bookstore chains -- B. Dalton, Waldenbooks and Crown -- were making it impossible for publishers of so-called "midlist" books to survive. ("Midlist" is a term of art for books, usually "serious" or "literary" works, whose sales are likely to fall in the broad zone between best-sellerdom and obscurity -- say, 10,000 copies.)

"What my wife and I have learned is that the market is inhospitable to midlist books," he said. "There's three individuals {buyers for the chains} who can lock you out of 2,000 stores." He added that sales to libraries, which 25 years ago "made the difference between losing money and breaking even on a midlist book," have shrunk dramatically.

Adler & Adler's location, Adler insisted, "was not by any means a factor" in its demise. "Washington helped give us an identity," he said. "It let us do a number of good books we would not have gotten otherwise."

Among the Washington-related books he cited were "America Can Win," Gary Hart's prescription for military reform (written with William S. Lind and published last year), and two of Adler & Adler's current offerings -- "The Douglas Letters," an edition of the late Supreme Court justice's private papers, and "Through Different Eyes," a debate between Hyman Bookbinder and James G. Abourezk on U.S. policy in the Middle East.

Even so, in its two years Adler & Adler has resisted specializing in Washington books, or in any other kind. Novels, memoirs, self-help programs, policy tracts, historical monographs, travel guides -- all have found a place on the company's list.

Raphael Sagalyn, a Washington literary agent, expressed admiration for the Adlers' professionalism and "great taste" in books, but wondered whether their "mainstream approach" to publishing could have been their undoing.

"As with any publisher trying to play into the mainstream," Sagalyn said, "there's an irresistible and understandable urge to publish the same books Random House and Simon & Schuster are trying to publish, to play by New York rules" -- but without the same resources or command of the nation's most prominent authors. "Acropolis doesn't play by New York rules," he added, referring to Acropolis Books, a Washington publisher specializing in self-help titles. "And what they do they do well."

Another Washington agent who has done business with the company, Audrey Adler Wolf (no relation to the Adlers), noted another obvious publishing luxury Adler & Adler was denied: "The big publishers are going to take on books that won't do so well, because their blockbusters are going to carry them."

James Adler's career in book publishing dates to the 1960s, when he held advertising and marketing positions at Random House and G.P. Putnam's Sons. In 1969, the Adlers moved to Washington and founded Congressional Information Service, which provided government documents to libraries on microfilm.

Adler & Adler was bankrolled by the profits -- reported to be well in excess of $30 million -- from the 1981 sale of CIS to a Dutch publishing conglomerate, Elsevier. But the book publishing company was struck by ill fortune almost at once.

Its edition of Kurt Waldheim's memoir "In the Eye of the Storm" had just appeared in January 1986 when the former U.N. secretary general was accused of serving in a World War II command that sent thousands of Greek Jews to the Nazi death camps.

The Adlers, who are Jewish -- Esthy Adler survived a Nazi concentration camp -- were devastated by the disclosures. Waldheim's book, which omitted mention of his controversial service, was quietly pulled from bookstore shelves and the Adler & Adler catalogue.

The Bethesda-based company has enjoyed a few critical successes since the Waldheim fiasco, notably "Memoirs of a Fortunate Jew" by Dan Vittorio Segre and "The Media Elite" by S. Robert Lichter, Stanley Rothman and Linda S. Lichter.

Robert Lichter, who directs Washington's Center for the Media and Public Affairs, was saddened by the news of Adler & Adler's impending end. "It's tough for people like us who want to publish books with scholarly credentials but want to reach a wider audience," he said yesterday. "I'd hate to think this is the price we pay for getting discounts at Crown Books."

With six more titles in the pipeline for the spring season, Adler was insisting yesterday that "we intend to do a thorough job of marketing them ... We're trying to deal with things in such a way that none of our authors are adversely affected."

He described their book publishing experience as "a rather interesting mixture of rewards and frustrations. The rewards are very real and very important to us ... but we're glad we're not going to be dealing with those frustrations indefinitely."

Adler urged any would-be trade book publisher to think carefully about a comparable venture "unless what he wants to do is publish merchandise instead of books."