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In the second part of his paper, the author discusses the relationship between the psychological concept of instinctual drives and physiological processes in the light of the new knowledge of the physiology and psychology of dreaming. A brief discussion is developed on current structural hypotheses in analysis and the relationship between dreaming and development of psychic structure. The author concludes that dreaming as a psychic event can only occur after psychic structure formation advances 'to the point of memory traces … so that traces of past events can be aroused to hallucinatory intensity during dreaming sleep'.
He proposes that during periods of regular or NREM sleep in the neonate, there is a build-up of energy; whereas during REM sleep, when various motor discharge patterns such as erections, smiling and sucking movements are more prevalent, the accumulated 'neural' energy is discharged. After psychic structure has developed in the infant, physiological drive discharge is in part replaced by psychological drive discharges accomplished through the process of dreaming. Many other significant aspects of drive discharge are discussed in relation to the dream-sleep cycle, including the erection periods during sleep and comments on the 'need' to dream. The author concludes that REM sleep and dreaming can only be understood from a holistic approach, from both an organismic and psychological frame of reference. There is also the very likely possibility that a biochemical substance is involved in triggering and sustaining the REMPs and 'that when the latter are suppressed it accumulates and is instrumental in producing psychotic-like states'.
Other significant aspects of dreaming and sleeping are discussed: the temporal spacing of dreams; Proposed Modifications of the Concept of the 'Dream as the Guardian of Sleep' (here the author suggests that the dreams can only be the guardian of REM sleep); the effect of anxiety on dreaming; the effect of fatigue, dream