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And the town played on

Niagara-on-the-Lake is a green oasis tucked into a corner of Canada between Niagara Falls and Lake Ontario. It is best known for locally made jam and fudge, elegant old homes on shady streets _ and an annual midsummer madness known as the Shaw Festival. Niagara-on-the-Lake may be the only town in North America with three legitimate theaters and not a single movie house. The Shaw Festival, which runs from May to October each year, brings in hordes of tourists from south of the border.

The welcome is warm, and the hordes are easily absorbed into the several fine hotels arrayed along its broad main street or tucked discreetly into its leafy byways. Unlike the more garish Niagaras 20 miles south, there is no neon-lighted motel strip here, nor a fast-food outlet. You can walk from one end of town to the other in half an hour. Most visitors do it several times a day.

The thoroughfare is Queen Street. The Festival Theatre is at one end (where for two blocks, it calls itself Picton Street) and shops, restaurants and two more theaters congregate in the middle. This is the only part of town where you may occasionally, in July and August, feel the press of the crowd.

To the northwest, Queen Street passes several of the town's historic homes before hanging a sharp left at Lake Ontario from where, on a clear day, you can see Toronto.

Reminders of Niagara-on-the-Lake's history also span Queen Street: Fort George, a reconstructed 1790s fortress, is at the Picton Street end, and Fort Mississauga, constructed just too late for the War of 1812, is at the Lake Ontario end. South of town is Butler's burial ground, and on Queen Street are the Niagara Apothecary (the oldest drugstore in Ontario) and numerous homes of historic and architectural interest, many open to guided tours.

The Niagara Historical Society on Castlereagh Street proudly displays memorabilia of "the first capital of Upper Canada," dating back to its founding by American Loyalists just after the Revolution. It was known as Newark in 1792, when the first parliament of Upper Canada met there.

Today, much of Niagara-on-the-Lake (renamed in 1900) has been lovingly restored. In addition to being picturesque, Queen and Picton streets also may be the most fattening six blocks in North America. You will find the Maple Leaf and Niagara fudge emporiums (tastiest treat: peach fudge, in early fall), Greaves' newly expanded jam emporium, several ice cream parlors, afternoon teas at the Buttery and McCray's _ and the Prince of Wales Hotel.

No Prince of Wales ever stayed in the hotel, although the Queen Mum came in 1981 to help celebrate the town's bicentennial. The hotel, a Victorian institution, has, like some creature out of Alice in Wonderland, expanded to fill the space available _ a full block on the corner of Picton and King streets.

The old place fancies itself rather, as the British say, and you may not care to lay out the $100-$200 for a room. But if you can make a reservation well enough ahead, the dining room is pleasant, and if you can't get in during the pre-curtain rush, they serve lovely eggs benedict for breakfast.

The Prince of Wales has been able to expand, and the numerous other large and small hotels in town have prospered, too, because of the success of the Shaw Festival, which celebrates its 30th season this year.

The festival began when part of the Court House was converted into a 400-seat theater, and a troupe of 10 unpaid actors performed George Bernard Shaw's Candide and Don Juan in Hell. Festival founder Brian Doherty broke ground for the 830-seat Festival Theatre in 1972, and it opened the next year with You Never Can Tell. In 1980, the festival's third stage, a converted cinema called the Royal George, across the street from the Court House, opened under the leadership of the festival's current artistic director, Christopher Newton.

The Festival Theatre has offered some spectacular productions in its 20 years, including the entire eight hours of Back to Methuselah (in two parts, with a dinner break).

The festival repertory also includes works by contemporaries of Shaw; as the Irish playwright lived to be 94, this covers a lot of theatrical ground. The festival's biggest hits have included Edmund Rostand's Cyrano de Bergerac, Noel Coward's Cavalcade, and a free-form production of George Orwell's 1984 in 1984 that took over all three theaters and much of the rest of the town for one memorable performance.

The more sedate Royal George has played host to mysteries, musicals and one-hour lunchtime specials. The upper floor of the Court House has been the setting for Clare Booth Luce's The Women, Coward's The Vortex and Henrik Ibsen's Peer Gynt.

With all the theatrical riches offered, an afternoon stopover on your way to Toronto or Niagara Falls is scarcely enough. Fortunately, if you elect to stay a few days, Niagara-on-the-Lake boasts several good hotels apart from the Prince of Wales. The 150-year-old Oban Inn, overlooking Lake Ontario, is a charmingly furnished country inn; the Moffat Inn, close to the Festival Theatre, is small and hospitable; and the new Queen's Landing has rooms overlooking the Niagara River. There are also numerous guest houses and bed-and-breakfasts at a lower tariff, with no loss of charm.

The quality of the eating places in Niagara-on-the-Lake is not quite up to the stylishness of its better inns, but there are certainly plenty of them. The Prince of Wales and Oban Inn have excellent dining rooms. There are also Starters, The Buttery and the Old Bakery Restaurant on Queen Street, and numerous others within a short walk or drive.

Linda Triegel is a theater critic living in Palm, Pa.

IF YOU GO

Getting there: Niagara-on-the-Lake is about 20 miles north of Niagara Falls and about five miles from the United States-Canada bridge at Lewiston, N.Y., via the scenic Niagara Parkway.

Hotels: For information on all kinds of accommodations, call the Chamber of Commerce at (416) 468-4263 or write POB 1043, NOTL, Ontario LOS 1JO, Canada. For guest homes only, call the Bed & Breakfast Service at (416) 358-8988. Rooms fill up fast in July and August, so reservations for those months should be made well in advance.

The 1991 season: The last performance is Nov. 10. For information or reservations, call the Shaw Festival Box Office at (416) 468-2172. The plays:

Festival Theatre: The Doctor's Dilemma (Shaw). Lulu (Frank Wedekind). A Cuckoo in the Nest (Ben Travers).

Court House: The Millionairess (Shaw). Hedda Gabler (Ibsen). Henry IV (Pirandello).

Royal George: A Connecticut Yankee in King Arthur's Court (Rogers & Hart musical). This Happy Breed (Noel Coward). Press Cuttings (Shaw, Lunchtime Theatre).

Other Attractions: Winery tours in nearby St. Davids, Queenston and just off the Niagara Parkway; the Welland Canal in St. Catharines; Queenston Heights Park and Brock's Monument.

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