2. EVOLUTION OF THE PRIMARY THALLUS. At the base of the series we find here also an elementary granular thallus which appears in some species of most of the genera. In _Gomphillus_, a monospecific British genus, the granules have coalesced into a continuous mucilaginous membrane. In _Baeomyces_, though mostly crustaceous, there is an advance to the squamulose type in _B. placophyllus_, and in two Brazilian species described by Wainio, one of which, owing to the form of the fronds, has been placed in a separate genus _Heteromyces_. The primary thallus becomes almost foliose also in _Gymnoderma coccocarpum_ from the Himalayas, with dorsiventral stratose arrangement of the tissues, but without rhizinae. The greatest diversity is however to be found in _Cladonia_ where granular, squamulose and almost foliose thalli occur. The various tissue formations have already been described[1007]. 3. EVOLUTION OF THE SECONDARY THALLUS. Most of the interest centres round the development and function of the podetium. In several genera the primordium is homologous with that of an apothecium; its elongation to an apothecial stalk is associated with delayed fructification, and though it has taken on the function of the vegetative thallus, the purpose of elongation has doubtless been to secure good light conditions for the fruit, and to facilitate a wide distribution of spores: therefore, not only in development but in function, its chief importance though now assimilative was originally reproductive. The vegetative development of the podetium is correlated with the reduction of the primary thallus which in many species bears little relation in size or persistence to the structure produced from it, as, for instance, in _Cladonia rangiferina_ where the ground thallus is of the scantiest and very soon disappears, while the podetial thallus continues to grow indefinitely and to considerable size. 4. COURSE OF PODETIAL DEVELOPMENT. In _Baeomyces_ the podetial primordium is wholly endogenous in some species, but in others the outer cortical layer of the primary thallus as well as the gonidial hyphae take part in the formation of the new structure which, in that case, is simply a vertical extension of the primary granule. This type of podetium—called by Wainio[1008] a pseudopodetium—also recurs in _Pilophorus_ and in _Stereocaulon_. To emphasize the distinction of origin it has been proposed to classify these two latter genera in a separate family, but in that case it would be necessary to break up the genus _Baeomyces_. We may assume that the endogenous origin of the “apothecial stalk” is the more primitive, as it occurs in the most primitive lecideine lichens, whereas a vertical thallus is always an advanced stage of vegetative development.