United States and the relation of their component parts to the controlling corporation so far as that relation turns on the intercorporate ownership of stocks and bonds. The facts there presented have been corrected and brought down to June 30, 1906, and are herewith submitted as Exhibit A. For the most part the leading facts are in the possession of the Commission as of June 30, 1907, being contained in the annual reports of carriers for that year. Under the law, however, these annual reports are not filed with the Commission until September 30, and the facts which they contain relative to intercorporate holdings and investments have not yet been fully examined and checked, for which reason they are not available for making an immediate reply to the Senate resolution.

It will be observed that the table of June 30, 1904, derives some of its information from unofficial sources. The corrected tables as of June 30, 1906, are made up entirely from official sources, that is to say, the special and annual reports of carriers to the Commission. The fundamental change to be observed during the two years which elapsed between the two reports is a growing tendency toward concentration of railway interests. Practically no cases have occurred where roads have been taken out from under systems of which they were a part on June 30, 1904. On the other hand, large numbers of railway companies which were considered to be independent in 1904 were brought under the control of systems. Concentration has taken place not alone on the financial side through corporate ownership or control, but also on the operating side; that is, many roads which were parts of systems, but were operated separately in 1904, have since lost their identity and have been merged in the main corporation and now make up a part of the mileage of the main stem. Appendix B presents the information on file in this office concerning the relation of express companies to each other and to railway companies. This is transmitted because it is thought that this comes within the scope of the resolution. It consists of three tables showing holdings of railway companies in express companies; the holdings of express companies in railway companies, and the holdings of express companies in express companies. This material is derived entirely from Special Report Series, Circulars 1 and 2, on Intercorporate Relationships.

There is also submitted, marked "Exhibit C," a copy of Appendix 6 of the Digest of the Hearings before the Senate Committee on Interstate Commerce, Senate of the United States, entitled "Concentration of railway control in the United States." The explanations contained in the text of this appendix apply to the data submitted in Exhibit A, which accompanies this letter. Attention is also called to the fact that in a table facing page 108 of Appendix VI just referred to, will be found another method of testing and measuring the extent of the concentration of railway control. This table shows the manner in which the boards of directors of important railways are made up. The significance of this table as bearing upon the purpose of the resolution of the Senate under consideration arises from the fact that the ability to appoint a director upon the board of what might otherwise be a competing company is one of the motives which leads a corporation to invest in the securities of another corporation. I have not ventured to consider that portion of the Senate resolution which asks the Commission "to state in what cases corporations

whose stocks so owned have been competitors with corporations owning their stock" as this is a matter of fact not shown by the record.

All of which is respectfully submitted.

HENRY C. ADAMS,

In charge of Statistics and Accounts.

Hon. MARTIN A. KNAPP,
Chairman Interstate Commerce Commission,

Washington, D. O.

EXHIBIT A

SHOWING PRINCIPAL RAILWAY SYSTEMS IN THE UNITED STATES AND THE RELATION OF THEIR COMPONENT PARTS TO

THE CONTROLLING CORPORATION.

BEING TABLE II OF APPENDIX VI OF DIGEST OF HEARINGS BEFORE SENATE COMMITTEE ON INTERSTATE COMMERCE, DATED JUNE 30, 1904, CORRECTED TO JUNE 30, 1906.

The information is derived from annual reports of the railways to the Interstate Commerce Commission and from Special Report Series, Circulars 1 and 2, on Intercorporate Relationships.

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