SUMMARYIn the course of their development the protonemata ofFunaria hygrometricaproduce two different substances which diffuse into the substrate. In the chloronema a thermo‐labile growth‐promoting substance is formed. In the caulonema, after about 10 days, a substance is produced which is thermostable and soluble in amyl alcohol, which can be dialysed, and which functions as a growth inhibitor. Both substances also influence bud formation. This is at an optimum only when there is a certain balance between these two substances.This promotion is fundamentally different from that brought about by treatment with kinetin, because kinetin can function only as an additional factor in promoting bud formation. Very probably it acts as an agent which creates centres of attraction toward which morphogenetic substances are drawn. This assumption is supported by the fact that kinetin cannot be transported and therefore has no ‘after‐effect’. It probably functions only in the caulonema cell it penetrates. It converts every caulonema cell into a ‘rea