Nation: OF WAR AND INFLATION

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WAR and inflation, those classic corrosives of society, last week sorely agitated the nation. From New York to San Francisco, tens of thousands of demonstrators paraded to protest the Viet Nam conflict, which now ranks as the fourth costliest war in U.S. history in terms of lives. As of the week ending March 29, combat deaths totaled 33,641, surpassing the Korean War total by 12. Of these dead, 10,000 have fallen since the Paris peace talks began. These grim figures provided an added spur for the peace marchers. With banners demanding BRING THE TROOPS HOME and END THE WAR, they swept down broad avenues, through thick Easter crowds, in Chicago and Atlanta, Seattle and Los Angeles.

The war, with its politically damaging casualty lists and its endless thirst for dollars, was also agitating Richard Nixon. But his prime concern appeared to be inflation. With the Administration barely ten weeks old, throttling inflation has plainly emerged as the President's No. 1 priority, and the word has gone out from the White House that until the economy is cooled off every other problem, however pressing, must be subordinate to it. "It has to be dealt with," Urban Adviser Pat Moynihan said last week. "There is no liberal or conservative position on it. Only a damned fool would ignore the problem."

Far from ignoring it, the President last week confronted it directly with action on two fronts: 1) With his approval, the Federal Reserve Board moved to intensify the squeeze on cred it. 2) At a meeting with domestic policymakers at his Key Biscayne retreat, he reviewed efforts to trim the budget enough to produce a surplus of at least $4 billion. Earlier, the Pentagon announced some cutbacks in Viet Nam spending that might be merely budgetary —but might also be a signal to Hanoi of deescalation.

Out of Reach. Nixon's determination to do something about the overheated economy was prompted by a realization that an "inflationary psychology" is taking hold among Americans. The 10% tax surcharge enacted last June has not slowed spending. Prices continue to rise at the briskest pace since the Korean War. Corporations, borrowing to expand their capacity by 14% this year, are pricing money out of the reach of home buyers, small businessmen, school districts and local governments.

Disturbed by the corporate borrowing, Federal Reserve Board Chairman William McChesney Martin Jr. warned that it was time to "pressure banks to ration credit." After the stock exchanges had closed for the three-day Easter weekend, the board moved on two fronts. First, it raised the discount rate (the interest that banks pay for the money they borrow) from 5½% to 6%. The increase, second in four months, brought the rate to its highest level since the 1929 crash. To make money more scarce as well as more costly, the board also increased the amount of cash that banks are required to keep in reserve. In effect, the board "froze" some $650 million in lendable funds, which translates into a withdrawal of more than $2 billion in credit from the economy.