 Any post-Kantian discussion of the relation of thought to being must come to grips with Kant’s rigid bifurcation between phenomenal appearance and noumenal reality. Of course, without strict adherence to this distinction, Kant’s own position would collapse into Berkleyan phenomenalism. Accordingly, post-Kantians such as Herbart, who wanted to maintain a strong realism, had to rethink this central feature of Kantian metaphysics. But while Herbart maintained the possibility of some relation between noumena and phenomena, Lotze went further in dissociating the two; hence, Lotze was led to oppose, as well, the notion of a single unchangeable substance lying at the base of the thing and constituting its essence. Accordingly, phenomenal properties, which say nothing about the true nature of a thing, say everything about our peculiar capacity of perception. Yet Lotze assumed that changes at the phenomenal level must reflect changes at the noumenal and he persisted in the belief that although appearance is not like reality it does, nevertheless, provide knowledge of reality. And so, he mustered adherence to Herbart’s realist standpoint while rejecting all correlative claims about the immutability of substance (cf. Santayana, 1971, pp. 152ff). Our only conclusion must be Santayana’s: “… although he retains the word substance he abandons the notion for which it commonly stands” (Santayana, 1971, p. 153). Hence, we might be tempted to see Lotze as inaugurating the reign of the Funktionsbegriff over the Substanzbegriff (cf., Cassirer, 1923).