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Navy Minister Nagano, instead of lining up with War Minister Terauchi, went over to confer with the politicians, the "despised civilians." Not because he was opposed to War Minister Terauchi did Navy Minister Nagano refuse to back him. His reason, and he was probably right, was that he thought that he and Terauchi would more easily get the present Diet to vote three billion yen ($850,000,000) for the Army & Navy than perform the same feat with a Diet elected by more or less angry Japanese voters who knew the Army had forced dissolution. In Tokyo, however, it is almost impossible for a Cabinet to exist if either or both Army and Navy Ministers do not pull with the Cabinet, and the Hirota Cabinet resigned. This week Emperor Hirohito, after conferring with Prince Saionji, last of the Emperor's hereditary advisers, called upon Kazushige Ugaki, retired Army General and onetime Governor-General of Korea, to form a new Cabinet. Preceding this grim political struggle in Tokyo was a sudden and at first mysterious halting of exchange transactions which tied up millions of yen in Tokyo and slowed up business with Japan all over the world for some 13 days. The London market had comparatively little difficulty in liquidating" its yen contracts, but Washington was perplexed and anxious because U. S. markets were badly clogged. Middle of the week the Governor of the Bank of Japan, Eigo Fukai, "explained" that the ban was only a "temporary delay," that Japanese banks were working with increased staffs to straighten the tangle. Said he: "It was necessary to stabilize the situation by slowing down unnecessary imports. In a few days exchange contracts will again be coming into the market."