Abstract. The classical theory of electrodynamics is built upon Maxwell's equations and the concepts of electromagnetic field, force, energy and momentum, which are intimately tied together by Poynting's theorem and the Lorentz force law. Whereas Maxwell's macroscopic equations relate the electric and magnetic fields to their material sources (i.e., charge, current, polarization and magnetization), Poynting's theorem governs the flow of electromagnetic energy and its exchange between fields and material media, while the Lorentz law regulates the back-and-forth transfer of momentum between the media and the fields. The close association of momentum with energy thus demands that the Poynting theorem and the Lorentz law remain consistent with each other, while, at the same time, ensuring compliance with the conservation laws of energy, linear momentum, and angular momentum. This paper shows how a consistent application of the aforementioned laws of electrodynamics to moving permanent dipoles (both electric and magnetic) brings into play the rest-mass of the dipoles. The rest mass must vary in response to external electromagnetic fields if the overall energy of the system is to be conserved. The physical basis for the inferred variations of the rest-mass appears to be an interference between the internal fields of the dipoles and the externally applied fields. We use two different formulations of the classical theory in which energy and momentum relate differently to the fields, yet we find identical behavior for the restmass in both formulations.1. Introduction. The electrodynamics of moving media is a complex subject that has been discussed in several papers, textbooks and monographs [1][2][3][4][5][6][7][8][9][10][11][12][13][14][15][16][17][18], yet continues to attract attention for its practical applications as well as its relevance to fundamental issues involving field-matter interactions. In the early days of the 20 th century, Minkowski used ideas from the newly developed theory of relativity to analyze the dynamics of arbitrarily moving bodies in the presence of electromagnetic (EM) fields. He constructed a stress-energy tensor for EM systems that incorporated the electric field E, the magnetic field H, the displacement D, and the magnetic induction B, relating the strength of these fields at each point ( , ) in space-time to the corresponding field strengths in a local rest frame of the material media at ( ′ , ′ ) [1]. Einstein and Laub initially endorsed Minkowski's analysis, and proceeded to summarize his results while presenting them in a less abstract language and in simplified form [2]. Subsequently, Einstein and Laub expressed skepticism of Minkowski's general formula for the ponderomotive force exerted on bodies in the EM field, and presented their own formulation for bodies at rest [3]. In the meantime, Abraham, also relying on notions of relativity and the Lorentz transformation of coordinates and fields between inertial frames, developed a modified version of Minkowski's stress-energy tensor for...