Vietnam War Boom Getting Out of Hand in the U.s.a,

From 'The Times'* Inspite of the slackening in the business growth rate, which first became evident in May, American businessmen and economists are becoming increasingly uneasy over the continuing threat of serious inflation, Among their main causes of concern is that the Vietnam War will intensify the mounting strains on the nation's production capacity and make an upward spiral of prices and wages inevitable, The administration's assurances that inflation is not a pressing danger has not alleviated their anxiety. A pollof the National Association of Purchasing Agents found more than half of their number in agreement that the Vietnam War was affecting their companies! business. But while some said that sales had increased because of defence demands the great majority complained that these demands were doing more harm than good: they had caused shortages of materials, a tight market in skilled labour, long lags in deliveries of materials, and rising pricese Earlier the Wall Street Journal reporting on shortages resulting from military demands, said that railways end shippers all over the country were complaining at the shortage of fwight cars, that machine tool manufacturers were being warned by the Government that they were going to get more and more priority orders for machines needed by producers of military goods, and that some big aircraft companies had had to tell airlines that, because of military priorities they would not be able to deliver some of the commercial aircraft promised for this year, Shortages of manpower, 'affecting more industries than shortages of specific goods', and shortages of money, ‘cutting across all kinds of business activity' were also noted. But economists, however much they differ about some other matters, are almost to a man agreed that the most pressing problem now facing the United States is inflation, This was brought out last week in a poll of more than 500 of them conducted by the Chase Manhatten Bank of New York, 86% of the academic ecomomists who took part in it and 94% of the business econon= ists said inflation far from being merely prospective was already here, But there is no general agreement on what to do about it. Some, but less than 30% of them were for higher tax rates. About an equal number were for reduced Federal spending. Fewer than one in five favoured tighter money. In s survey of 146 manufacturers by the National Industrial Conference Board about 75% expressed belief that economic pressure would engender serious inflation unless checked, Most of them advocated a reduction of non-military spending by the Federal Government, 42% favoured tighter credit and a further rise of the Federal Reserve discount rate; 39% were for some inorease in taxes; and 32% suggested further informal pressure by the Government on labour and management to hold down price and wage increases, But in advocating Government action to halt inflation, a number emphasised that brakes should not be put on too hard or too fast quickly if the risk of sending the ecomomy into a deflationary cycle in the next two years was to be avoided. Amis article appeared in the 13th June issue of The Times under the headline: ‘Vietnam War Demands Causing Shortages.'