Mere associated growth however even between a fungus and an alga does not constitute a lichen. An instance of such growth is described by Sutherland[234] in an account of marine microfungi. One of these, a species of _Mycosphaerella_, was found on _Pelvetia canaliculata_, and Sutherland claims that as no apparent injury was done to the alga, it was a case of symbiosis and that there was formed a new type of lichen. The mycelium, always intercellular, pervaded the whole host-plant, and the fungal fruits were invariably formed on the algal receptacles close to the oogonia. Their position there is, of course, due to the greater food supply at that region. Both fungus and alga fruited freely. A closer analogy could have been found by the writer in the smut fungus which grows with the host-cereal until fruiting time; or with the mycorrhiza of _Calluna_ which also pervades every part of the host-plant without causing any injury. In the true lichen, the alga, though constituting an important part of the vegetative body, takes no part in reproduction, except by division and increase of the vegetative cells within the thallus. The fruiting bodies are always of a modified fungal nature. 2. PHYSIOLOGY OF THE SYMBIONTS The occurrence of isolated cases of parasitism—the fungus preying on the alga—in any case leaves the general problem unsolved. The whole question turns on the physiological activity and requirements of the two component elements of the thallus. From what sources do they each procure the materials essential to them as living organisms? It is chiefly a question of nutrition. A. NUTRITION OF ALGAE _a._ CHARACTER OF ALGAL CELLS. Gonidia are chlorophyll-containing bodies and assimilate carbon-dioxide from the atmosphere by photosynthesis as do the chlorophyll cells of other plants. They also require water and mineral salts which, in a free condition, they absorb from their immediate surroundings, but which, in the lichen thallus, they must obtain from the fungal hyphae. If the nutriment supplied to them in their inclosed position be greater or even equal to what the cells could procure as free-living algae, then they undoubtedly gain rather than lose by their association with the fungus, and are not to be considered merely as victims of parasitism.