The systems discussed were obtained from dissolving aluminium and calcium soaps of fatty and naphthenic acids in hydrocarbons with the aid of peptizers like water, xylenols, alcohols, 'Cellosolve' or cresols. They behave similarly to solutions of rubber in benzene. Rheologically they exhibit certain peculiarities associated with secondary flow phenomena. It was observed that when such systems were subjected to stress, their free energies increased. The first series of experiments dealt with the behaviour of jets in the form of expanding conical sheets. Newtonian liquids broke up when the kinetic energy of the jet exceeded a certain function of the surface energy which tended to stabilize the sheets. With these elasto-viscous systems, the kinetic energy required to break up the expanding conical sheets was much greater than this function and thus it was concluded that the stressed sheets had a higher free energy than the unstressed relaxed body of the same liquid. The second series of experiments dealt with the quantitative evaluation of the free energy on subjecting the systems to stress at different temperatures. A rod was rotated inside a stationary sleeve, the space between being full of the liquid under consideration. From the drop in the level of the liquid, it was deduced that the internal energy and the entropy were both raised by shearing the system. The increase in internal energy was greater than the rise in entropy, and hence the free energy, as a whole, increased on shearing. These effects became less noticeable as the temperature was raised. Next a series of experiments was conducted on the behaviour of these systems when subjected to different states of shear between discs, cones or cylinders in which one member was rotated and the other held stationary. In all experiments secondary spontaneous flow from regions of high shear to regions of low shear confirmed the hypothesis that the increase in free energy on straining (or stressing) the system resulted in local instability. Surfaces of uniform shear acted as if they were semi-permeable membranes with a concentration gradient across them due to the structural units moving from regions of high to those of low shear values. Thus a species of osmotic pressure was generated which could be measured. These peculiar phenomena only occurred when there was a marked difference in the rate of shear between different points in the system; under uniform rates of shear they did not arise. Finally, experiments with pipes showed that these systems possessed two peculiarities: (1) the inlet end effects were far greater than those encountered with Newtonian systems under similar conditions; and (2) there appeared to be a retarding layer effect in the pipe. It is concluded that for these systems studies of the balance between input energy and the portions which are lost and stored would be better approaches to the study of the structure of the systems than a study of the viscosity of the liquids as such.