The old controversy has in recent years been unexpectedly reopened by Elfving[179] who has sought again to prove the genetic origin of the green cells. His method has been to examine a large series of lichens by making sections of the growing areas, and he claims to have observed in every case the hyphal origin of the gonidia: not only of _Cystococcus_ but also of _Trentepohlia_, _Stigonema_ and _Nostoc_. In the case of _Cystococcus_, the gonidium, he says, arises by the swelling of the terminal cell of the hypha to a globose form, and by the gradual transformation of the contents to a chlorophyll-green colour, with power of assimilation. In the case of filamentous gonidia such as _Trentepohlia_, the hyphal cells destined to become gonidia are intercalary. In _Peltigera_ the cells of the meristematic plectenchyma become transformed to blue-green _Nostoc_ cells. A study was also made by him of the formation of cephalodia[180], the gonidia of which differ from those of the “host” thallus. In _Peltigera aphthosa_ he claims to have traced the development of these bodies to the branching and mingling of the external hairs which, in the end, form a ball of interwoven hyphae. The central cells of the ball are then gradually differentiated into _Nostoc_ cells, which increase to form the familiar chains. Elfving allows that the gonidia mainly increase by division within the thallus, and that they also may escape and live as free organisms. His views are unsupported by direct culture experiments which are the real proof of the composite nature of the thallus. E. MICROGONIDIA