Kenneth Noland, who established a new record price -- $300,000 -- for a work by a living American artist last week, is known as a Washington color painter. So is the lateMorris Louis, whose work ran a close second auction. Their triumph should put to rest, once and for all, the president wail that Washington artists can'tmake it to the top of the world art market.

But does it?

In fact, Noland didn't stay in Washington. When, in 1962, he was offered a yearly guarantee by dealer Lawrence Rubin, he quit his teaching job at Catholic University, went to New York "to get myself together" and three years later moved to Robert Frost's old farm in Vermont, where he became an art-world star. "You have to show in New York, but you surely don't have to live there," says Noland, who proved it. Morris Louis chose to stay in Washington but died at age 50, before he had a chance to savor any real success.

The question of whether Washington has what it takes to keep its artists here became a public issue in 1976 when several gifted young Washingtonians began an exodus to SoHo. The pull to New York was so strong that they were willing to live there even though it meant a twice-weekly commute (at their expense) to teaching jobs in the Washington area. At roughly the same time, Washington's only avant-garde dealer, Max Protetch, also left for New York and subsequent success on 57th Street.

Since then -- with the arrival of the Hirshhorn and the East Wing, dozens of new, more sophisticated art dealerships, more alternative spaces like WPA and more decent studio space -- the tide has been stemmed, and more and more artists are not only staying here but coming here from other cities to launch their careers. Washington galleries now benefit from a constant stream of visiting curators, dealers, critics and collectors who flock to this great museum city. "People buy when they're away from home," says dealer Barbara Kornblatt, who moved to "406" from Baltimore last year, and is "bowled over" by the results.

Yet the talent trickle continues. Why? What is the missing ingredient that would make Washington more than a rest stop on the highway to SoHo?

"If there's a problem with artists making it in Washington, it's surely not the art, and it's not the dealers or the museums," says one prominent museum curator who begged anonymity after taking a broad swipe at the only remaining segment of the art world -- the collectors. Hirshhorn curator Howard Fox was more blunt: "The dealers have been adventurous, the museums in their various ways have been adventurous, but I don't see that reciprocated in the art audiences here. I see stunning collections in Washington, but they tend to be very predictable."

Gerd Sander, proprietor of Sander Gallery, has come to the same conclusion and after six years of selling 19th and 20th-century European photographs in Washington, will close his gallery here at the end of January with the aim of reopening in Manhattan.

But Sander is not leaving because his business has failed. It has, in fact, doubled each year to the present half-million-dollar gross. "It's just that every six months I do my statements to see where I sell, and it isn't here. Over the past six months, I've had more clients from Baltimore than I ever had in Washington.

"The gallery here is sheer frustration," says Sander. "I can't even get the public to come in and look at it." His average weekly attendance is 15, which he admits may be due in part to his unfamiliar merchandise, as well as to his location at 2600 Connecticut Ave., somewhat remote from the gallery clusters around Dupont Circle and the 7th Street corridor. "But I don't think anything would have mattered," says Sander. "Washington is just not a very art-conscious town. Maybe there just aren't enough crazy people here."

Sculpture dealer Diane Brown, whose business is flourishing now that she's moved to "406," says she too is "thinking seriously" about moving to New York, "where there's a larger audience more accustomed to spending money on art, and where people don't have a stroke at the idea of spending more than $10,000. Washingtonians are going to have to do some of the work too," she says, "if they want good galleries to stay and more to come."

Jack Rasmussen, who specializes in lesser-known Washington artists, is more pragmatic about the audiences he serves."There's a built-in limitation to the market here; it's not a big city for one thing, and there's a limited amount of knowledgeable money. I sell very little to government employes, and mostly to doctors and lawyers. But the art I sell requires people to take chances, and you're far more likely to find buyers for the more established names."

While the dealers and curators blame the collectors, the artists in Washington still tend to blame the museums for their "condescending" attitude toward Washington artists. The national museums deny that supporting local art is their mission; the Phillips is a private institution and beholden to no one. It is thus the Corcoran that takes the heat. "Between the school and the museum, more than half the Corcoran's operating budget is devoted to local art and local artists," says the museum's director, Peter Marzio. "If that's not a commitment, I don't know what is."

Two years ago, the museum appointed a special curator for the Washington region, Claire List, who has subsequently visited dozens of studios and produced some small shows of Washington art. Now the artists complain that the Corcoran is "separatist." "They can't have it both ways," says Marzio. Nevertheless, he now plans to change List's title to curator of contemporary art. She will keep her present job, but will also be in charge of the next Biennial.

"WPA has done a great job, but we can't do it all," says Al Nodal, head of the Washington Project for the Arts, the city's leading artist-run space. "Washingon is a great place for artists to establish themselves -- it certainly beats being just another artist walking the streets of SoHo. At least here you get some humanity. But institutions need to do more, and there's not enough financial support in the form of buying." Nodal also bemoans the severe lack of good and secure studio space, which, he says, tends to keep artists constantly off balance.

"If an artist has the final, consummate ambition of an artist, he has to show in New York but he doesn't have to live here. Half my artists don't," says Ivan Karp, of SoHo's busy O K Harris gallery, who claims to have seen the work of 100 hopeful young artists each week for the past 25 years. "Roughly 5 percent of the eager new faces are from the Washington area," says Karp, "and I suggest that they try to begin their careers at home. Most of us leading dealers go to Washington often, and we see what's around." How many Washington artists does he sell? "I don't know," says Karp. "I don't care where they come from."

"New York is a place for artists with chutzpah," says Washington photographer Paul Feinberg. "New York is a place where everybody seems to operate at the same speed I do, and I like that speed and pressure and size," says Steve Ludlum who moved to New York from Washington a month ago. "I never felt stifled in Washington, but just getting by is not my style. I'm an ambitious person, and New York is a very demanding place. If you're coming here you have to do your homework, and match yourself to the city. But anyone who wraps up their whole life in getting a New York show ought to get their heads examined. You can have 20 shows in New York and still be an anonymous, miserable individual. The art scene here is enormous. It could swallow 10 Washingtons without a trace."

Ed McGowin, the best known of the artists who left for SoHo in 1976, says he, too, left for positive reasons. "Obviously one can make it in Washington, and the evidence is Gene Davis, Sam Gilliam, Anne Truitt, Rockne Krebs and the people before them: Jacob Kainen, Leon Berkowitz, Jack Perlmutter, Jim Twitty, all of whom have substantial, active, vigorous careers. You can make it in a number of ways.

"But it's a never-ending question about Washington, particularly in relation to New York, and there's no single solution. Some people thrive on it, some people die on it. My advice would be, whatever problems artists have -- young or old, and they all have problems -- I think it would be short-sighted to blame them on Washington . . . Washington suits some people better at certain points in their lives, and so does New York. But there's no formula. If I knew the right strategy for everyone, I'd bottle it and sell it."

Meanwhile, the cost of living in New York may well have stemmed the talent drain. "If you want to live in Manhattan," says Steve Ludlum, "it will cost you $1,500 per month rent on top of a $25,000 "fixture fee." As a result, Ludlum has taken up residence in Brooklyn.

"If you have to live in Brooklyn," comments Jack Rasmussen, "you might as well live in Washington."