In these experiments we have shown that, with the technique adopted, differences in behavior are exhibited by fragments of the heart taken from different localities. The different localities behave in a more or less uniform manner. The pace-making function, for instance, is found at first throughout the cardiac tube but later it is restricted and comes to reside in a special small area at the back of the right auricle near the center. The pace-making system is able to develop a rate comparable to that shown by the whole intact heart, irrespective of the size of the fragment in which it is contained. Later, under the circumstances of the study, the ventricular structures lose the power of spontaneous contraction, and later still, the auricular ones also. It need scarcely be pointed out, however, that this loss refers only to the function of pace making. In its place, the various localities of the heart undoubtedly take on other capabilities. This is what is meant after all by differentiation. The question whether the pace-making and conduction systems reside in the remains of primitive portions of the cardiac tube in an undifferentiated form, or whether on the other hand these primitive portions develop into differentiated structures which preside over these functions may be reviewed afresh. Obviously the tube in its early state possesses these functions; obviously also the major part of the heart loses them during the course of development. A knowledge of the changes in form paralleling changes in function would have great interest. On this phase of the problem we hope to report later. On the basis of these observations, differentiation from the point of view of stimulus production may be viewed perhaps in this manner. Pace making, the conduction of impulses, and contraction are the primitive functions of the tube. As the tube develops into the adult structure, pace making and conduction are supposedly served by tissues resembling in structure the original ones. Whether as a matter of fact a structural change takes place is an interesting and important problem. Those portions of the heart which require to develop greater degrees of energy lose the primitive functions of pace making and conduction, and, in the transformation, take on a differentiated structure. It is, then, not the structures in which the primitive functions of pace making and conduction reside which are differentiated, but the greater mass of ventricular muscle. These reflections have their origin not only from our own work but they grow out of observations to be found in the writings of those (A. Keith and I. Mc-Kenzie) who call the nodal and conduction tissues in the heart, embryonic. But whether from the point of view developed here the use of this term is completely descriptive remains an interesting problem.