well being of
the mills whose product is thus disposed of.

Strength of Agents
Makes "Paper" Acceptable

It is evident that no ordinary capital would be sufficient for the
supplying of money on call to mills in the immense quantity needed, and
it is here that the banker's capital is called into use. The commission
house is usually a concern of substantial means, sometimes very rich, and
nearly always of a financial standing, which will give it, on its own
account, an assured credit. At certain times of the year the calls for
money from the mills are greater than at other times, and as shipments
come forward, and advances are required, the commission house, in order
to put itself in funds, will issue a series of its own notes in
convenient sized amounts, $5,000 to $10,000 each, for instance, and will
offer these for sale, through its note broker.

This paper, which commands an advantageously low rate of interest, and
which is issued for convenient periods of time, averaging perhaps four
months, is much sought after by banks and other institutions in primary
markets and throughout the country wishing to invest current funds in a
safe and not unprofitable medium. This paper is so acceptable to banks
not only because the credit of the issuing firm is behind it, but also
because it is known that the money which is obtained for the notes will
be lent out to mills on ample collateral. The issuing house is in a
position so entirely safe that hardly ever can a question arise as to its
ability to take care of its borrowings.

CHAPTER V

Financing Cotton and Cotton Cloth

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 wa