No industry shows better than the cotton industry the economic importance of banking service. No industry, perhaps, utilizes to such a complete extent the modern instruments of credit, nor is so dependent upon these instruments for its proper functioning. At no point in the progress from seed to cloth is the capital represented by the cotton necessarily or even customarily tied up. And not only may the cotton itself at any stage be the basis of credit accommodation, but also, the actual added value which the labor of any factor in the chain may give to the cotton may itself be realized upon in advance. The credit possibilities of the industry have grown with the admission of acceptances to rediscount in the Federal Reserve Banks, and this admissibility has likewise played a part in the present growth of the warehouse system, the lack of which was a handicap to the industry in past years. Credit Necessary from Seed to Finished Product In considering the raw cotton and the cloth market it was necessary to include some account of the financial and banking processes involved in the various commercial transactions undertaken. It is perhaps advisable, however, even at the risk of some repetition, to give a quick survey of the financial and credit aspects of the industry as a whole from the time the cotton is placed in the ground up to the actual sale to the cutter-up or the jobber. The utilization of credit begins, as we have seen, with the very planting of the crop. Many of the growers, even those who own their farms, are men of limited means, and are not able to pay for the necessaries of life and of labor during the long growing season. The country storekeeper, accordingly, in return for a lien on the crop, allows them credit at his store, usually charging interest based on the monthly statement of their ledger accounts. He in turn receives the necessary accommodation for his own purchases from the local bank, or from the local buyer or factor with whom he is affiliated. The high prices prevailing during the past few years have undoubtedly changed to some extent the small grower's financial position. Cash for the Grower From the Local Bank The larger growers, or the great corporations which let out cotton lands to renters, usually operate the stores in their villages upon the same basis, credit being advanced against the renter's share of the growing crop. Even these large corporations are seldom able to meet the heavy demands of the growing season without recourse to the credit service of those to whom they sell their cotton, or to the local banks. The banks, or buyers, in turn discount at least a proportion of the commercial paper thus created with their correspondent banks in New York, Boston, or other financial centers. This credit arrangement, it will be seen, is almost entirely based on a moral risk, the lien being made upon the growing cotton which cannot be liquidated until it is grown, picked, and ginned.