The Interpretation of Dreams by Sigmund Freud Chapter 8 Page 7

memory we found to be correct, but not troublesome, as this is only the last manifest operation in the work of disfigurement which has been active from the beginning of the dream-work. In the bitter and seemingly irreconcilable controversy as to whether the psychic life sleeps at night or can make the same use of all its capabilities as during the day, we have been able to agree with both sides, though not fully with either. We have found proof that the dream thoughts represent a most complicated intellectual activity, employing almost every means furnished by the psychic apparatus; still it cannot be denied that these dream thoughts have originated during the day, and it is indispensable to assume that there is a sleeping state of the psychic life.

Thus, even the theory of partial sleep has come into play; but the