How to punctuate the following paragraph:

They fancied that every thing upon the earth in the air or in the water had a life like their own and that every sight which they saw and every sound which they heard was caused by some intelligent being.

Can anybody help, please? Thanks 

Reply from AndyHB:

I'd say it goes thus:

They fancied that every thing upon the earth, in the air, or in the water had a life like their own, and that every sight which they saw and every sound which they heard was caused by some intelligent being.