In Alexandria, George Washington's hometown, history is big business, and keeping an eye on the past is a way of looking out for the future.

It is a city where people in Old Town haggle over whether a cornice is suitably Georgian, where the Public Works Department carefully saves cobblestones for repairing some of the older streets and where the city payroll includes the unusual post of historic coordinator and archeologist.

But the old city only discovered the business of history - and the cash it could bring - about 10 years ago.

In 1968, the city's total expenditure on historic properties was a modest $8,600 - used to build an amphitheater for Fort Ward Park, a Civil War compound in the western section of the city.

In the last decade, however, the city government has developed restoration fever: $3,390,600 has been spent to acquire and refurbish old buildings. A few years ago, to promote the ambience of Old Town, the city began installing underground wiring and Gadsby lights and laying brick sidewalks along some principal Old Town streets. The project will cost about $5 million when it is completed, according to Dayton Cook, transportation and environmental services director.

In addition, the city bought the Torpedo Faxtory from the federal government for $1 million and spent another $144,000 to create an arts center there. Although the Torpedo Factory is not an historic building, it has become key in drawing visitors to the small shops on lower King Street.

In 1970, the city also joined the Northern Virginia Park Authority after assurances that the Park Authority would restore Carlisle House, a mansion built in 1752 and described as the "city's grandest home." Budget officials estimate the city has spent $2.7 million in capital improvements payments to the authority since its membership began.

The Alexandria Tourist Council was also upgraded from a small, part-time service to a full-time center costing the city $96,000 a year.

Last year alone, the city spent $394,156 to operate its historic projects.

Preservation of the city's old structures, both public and private, has been at the center of the struggle between those who wanted to build the new and those who wanted to save the old. The stakes, both sides claimed, were the economic life and future of Alexandria.

How important preservation - and the resulting tourism trade - have been to the fortunes of the city depends largely on who is asked.

Peg Sinclair, director of the Alexandria Tourist Council, believes the restorations have been crucial to the tourism trade. "It is the architecture, there is no question, that is the key. If we were doing all this (promotion) in a high-rise, glass-and-steel setting, it just wouldn't go."

Sinclair estimates that 600,000 to 700,000 tourists visit Alexandria a year. In 1976, the last year complete figures were available from the Virginia State Travel Service, travelers left behind $43,929,000, she said.

"Tourism is a tremendously lucrative business in Alexandria," Sinclair said. "There's almost no other place to go for the city."

Bob Bellavance, executive director of the Alexandria Chamber of Commerce and a spokesman for the business community, disagrees with Sinclair's assessment.

"The Sears store in Alexandria does more business than all the hotels, restaurants, antique stores and gift shops put together," he said. "Tourism is a very important part of our economy, but it's not the backbone . . . There's more to this city than Old Town."

Bellavance said his figures show that tourist sales in 1976 accounted for only 12.8 percent of all retail sales in the city, or about $53.7 million out of $411 million.

And Bellavance contends that the number of tourists has been steadily declining since the Bicentennial.

"The people have lunch or dinner here - that's nice. And they may buy a few gifts here. That's nice too, but it's minor . . . Right now there are 800 acres of land that could be used for development," principally in Cameron Valley, west of Old Town, and on the city's waterfront, he said.

Development - where and how much - has been the argument around the historic district for many years.

Edward T. Braswell, chairman of the city Planning Commission for the last 20-odd years, recalls several "hair-raising" escapes for Old Town.

Braswell remembers that in the 1960s the city hired consultant John J. Beggs, who produced an ambitious proposal to bulldoze almost everything in a six-block area "north of King and east of Washington streets (including Braswell's house) and put up high rises."

The Beggs Plan galvanized the preservationists. "We ran that fellow out of twon, so to speak," Braswell said.

The preservationsists were equally successful in defeating other proposals, including a petroleum heating plant on the water-front and other plants that would have accomplished the wholesale high-rising of Old Town.

In the meantime, some local businessmen, like Wellington Goddin, were making it respectable to renovate. Goddin, who has had a hand in developing the Fish Market, Pellicano's, The Wharf and many other properties along the King Street corridor, remembers the difficulty he had in financing his first purchase on King Street.

Goddin was trying to buy three warehouses in 200 block of King Street for $17,500 apiece. "I had $20,000 in cash and was only asking for $32,500. Three banks turned me down. One banker told me, 'I don't think that block's any good, and I don't think it ever will be.'"

Goddin finally got the money, and sold the buildings 18 months later for $24,000 apiece, he said. One of the warehouses sold recently, with almost no improvements, for $140,000, he added.

Within a few years, business was booming on King Street, along with the rents. Goddin said the rental of 1,500 square feet of space in the 100 block of King Street has gone from $600 a month to $2,500 a month in 10 years or less.

By the end of the 1960s, the preservationists' political clout was increasing along with theri prosperity. In 1969, the city government began showing signs of restoration fever.

Over protests from the city's poor - that preservation was a dilettante movement that would squander on buildings public funds that should be used for children's glasses - and amid businessmen's complaints that the ramshackle Lyceum should be torn down, the city bowed to the pressures of the preservationists and intervened to save the old mansion.

The Lyceum decision was followed by other city-sponsored preservations and restorations, including Lloyd House and Gadsby's Tavern.

The city also hired an historic properties coordinator, architect Richard Bierce, who is now compiling a register of buildings of architectural and historic merit in the city that are more than 100 years old. They will receive the same protection as those in the historic district.

In the 1970s, however, the emphasis by preservationists seems to be shifting from saving buildings to preserving the quality of life for city residents. While businessmen are pressuring for more development, others like council members Beverly Beidler and Ellen Pickering, are concerned about keeping a liveable city.

At a recent conference of city planners, Beidler said, "I'm really worried about our covering up every inch of ground in Old Town . . . How much is enough? Rent on King Street are soaring, and higher rents mean the need for more customers," and more customers mean more parking, which means more development.

Pickering points out that as rents soar, smaller businesses are being forced out and replaced by expensive specialty shops. "Most of the people on the street are little secretaries running around at lunch with $3 in their pockets. They can't afford the bootery or the jewelers. We just don't have that many people coming through Alexandria with the kind of money to support these shops.

"There has been a fragile, delicate marriage between residents and business in the city, but if the businesses become dominant, it will kill what Alexandria has always been - a place to live and work."