Hypnosis has been used throughout human history, with early practitioners ranging from (according to one expert archaeologist) the Celtic Druids to the yogis of India. For much of the Western world's history, hypnotherapy was viewed with skepticism or even outright fear, as deliberately putting someone into a trance state was considered to be enchantment and spellcasting, and a person who did so would have run the risk of being executed as a witch or warlock.
During the Enlightenment (the 1700s), hypnotherapy began to receive attention again. This was the era when chloroform, germs and vaccination were discovered. The earliest named pioneer of hypnotherapy was Franz Mesmer, who gave his name to "mesmerism", which has been used as an alternative term for hypnosis. Magnetism had just been discovered, and it was believed by Mesmer and others of his kind that there was a form of "animal magnetism", similar to the "animal electricity" that had been discovered by Galvin in his famous experiment involving frogs' legs on copper wire during a thunderstorm. Everyone could see that metals could affect each other via "mineral magnetism"; was it possible for living beings to influence and affect each other via "animal magnetism"?
Later on, the term "hypnosis" was coined and Mesmer's name fell out of favour, similar to the way Galvin's name had been dropped and the word "electricity" used instead. The word was based on the Greek hypnos, meaning "sleep", as a hypnotic trance was considered to be a form of sleep, the only other alternate state of consciousness known (or at least accepted) at the time. The general public was intrigued by this new form of therapy and often came to sessions where they could experience "instant sleep" and all its purported benefits.
As was the case with all new therapies, the topic of hypnotherapy was highly debated. On the one hand, some practitioners claimed that an individual in a hypnotic trance could diagnose their own illness with extreme accuracy. Some disciples maintained that health could be transmitted from a well person to a sick one via "animal magnetism" - a sort of beneficial infection. Others were more skeptical, viewing hypnotherapy as a quack cure that worked via the placebo effect.
One area where hypnotherapy came into great suspicion was the possibility that a trained hypnotist could force people to do something against their will. At the mildest end of the "unwanted influence" spectrum, people were wary of the possibility of a male therapist (all therapists were men in these pre-feminism days) making a woman patient fall in love with him, whether this was appropriate or not. At the other extreme, some people seriously considered that spies and enemy agents could use hypnotism for political ends, using the technique to influence government officials and to extract sensitive details.
Science soon learned that the mind plays a huge role in general health, and researchers began to explore hypnosis and hypnotherapy. Two famous schools were established where hypnotherapy was studied, the Paris School and the Nancy School.
The most famous person to attend the Nancy School was Sigmund Freud, considered to be the father of psychology and psychotherapy. Freud opened the way for modern psychology and psychotherapy, and hypnosis was one of his original tools for treating patients suffering from what we would nowadays call stress (but which Freud called hysteria). A patient lying on Freud's famous leather couch would be put into a hypnotic state (which, experts say, is not a form of sleep but a form of highly concentrated consciousness where the mind is focussed on one thing only and shuts out all distractions). In this hypnotherapy trance, the patient was more able to relax and to open their mind to the repressed memories that often formed the root cause of their stress or other mental problem. Even today, hypnotherapy is often used for "regression", allowing the patient to bring up memories of his or her past in order to deal with present issues.
When one considers Freud's concept of the mind and consciousness, the use of hypnotherapy made sense. According to Freud's theories, unwanted thoughts - be they painful memories or desires of the "Id" (the primal, untamed part of human nature) that are considered unacceptable by the "Ego" (the more sophisticated, rational and moral side) - are pushed beneath the threshold of consciousness, but are able to affect the individual's behaviour via troubling dreams, anxieties and phobias. The purpose of psychoanalysis is to expose these memories or desires, and then to find a way of "sublimating" them (i.e. satisfying those desires in a harmless way). Along with free word association, hypnotherapy was used to expose these desires or uncover childhood memories.
Pierre Janet was another pioneer of hypnotherapy. Janet came up with the idea of "dissociation", where a person's consciousness withdraws from the present emotions and sensations, often in response to trauma. In a curious interplay, Janet saw a hypnotic trance as a form of dissociation (certainly, when in a trance state, a person certainly becomes less aware of his or her environment) that could be used to diagnose the root cause of a mental disorder - oddly, the disorders themselves manifested as dissociative (they called it hysterical) behaviour.
Another early pioneer of hypnotherapy and suggestion to change behaviour was Émile Coué. Coué investigated auto-suggestion and self-hypnosis (he called it "conscious autosuggestion"), with his main idea being that if you repeat something to yourself often enough about your own behaviour or habits, you will bring about the desired change. Coué's best known autosuggestion phrase for his patient to repeat themselves was "Every day, in every way, I am getting better and better," which was recited prior to going to sleep (a state very similar to a hypnotic trance). Coué is considered to be the founder of the self-help movement, and laid the groundwork for works such as The Power Of Positive Thinking and the like.
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