Shortly following the development of the serous exudate in the submucosal tissues, the epithelial lining is found to suffer from the reaction. The serous exudate does not remain confined to the interstitial tissues, but is poured out through the mucosa into the trachea. It would appear that the amount of this clear exudate may become greater than can be dealt with by the mucosa, with the result that an accumulation of this serous fluid takes place between this epithelial layer and its basement membrane. We have repeatedly seen considerable stretches of the mucosa lifted from the basement membrane and shed in large plaques into the lumen. These mucosal cells at the time of their desquamation retain fairly well their morphological characters, and do not show evidence of necrosis prior to their removal. Disintegration of these cells naturally occurs while lying in the secretion of the trachea, and a variable cellular mass in stages of disintegration may often be found both in smears and sections. When the epithelial cells are lifted in wide plates, a type of bleb develops which is easily broken and then disintegrates. The desquamation of the lining membrane is a fairly constant occurrence in the cases coming to autopsy. In the majority of those which we have examined the greater portion of the trachea was completely denuded, save for small islands lying in the recesses near the mouths of the mucous ducts. In one case this lesion was accompanied by a process of ulceration, due in all probability to the invasion by other micro-organisms. The denuded tracheal surface usually shows a further inflammatory reaction in which a cellular exudate then makes its appearance. This reaction is mainly one in which lymphocytes and plasma cells infiltrate the spaces previously occupied by the serous fluid. The reaction is limited to the submucosa and does not extend into the tissues beyond the cartilages. We have found only occasional polymorphonuclear leucocytes lying close below the surface. During this period, however, varying grades of degeneration may occupy the upper layers. The basement membrane particularly seems to suffer by losing its characteristic outline and staining qualities. This membrane becomes swollen, softened and indefinite. At times a homogeneous precipitate occurs along its free surface giving rise to an appearance resembling a false membrane. This deposit is, however, distinctively different from the diphtheritic membrane of other infections. It is interesting, however, that where such deposits and degeneration occur in the basement membrane more or less degeneration and necrosis also occur in the connective tissues immediately neighboring to it. These tissues show a peculiar granular destruction and alter their staining qualities. Moreover, and what is more important, under these conditions the dilated blood vessels are found to suffer from the injuries taking place in their neighborhood. We have repeatedly found partially or completely