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Although the phenomenon of hypnosis goes back to ancient, perhaps prehistoric times, modern hypnosis starts with Franz Anton Mesmer.
Mesmer was born in Germany and studied medicine in Vienna. He began practicing his theories, eventually called Mesmerism, in Vienna but moved on to Paris where his work became fashionable. He used the term "animal magnetism" for a fluid or force within his body that would let him connect with and cure his patients. The king finally sent a commission to investigate Mesmer, and they determined there was no physical force but any results were due to imagination, or placebo, as we would say. The commission members were the great chemist Lavoisier, the astronomer Jean Sylvain Bailly, the physician and inventor M. Guillotine, and the American ambassador Benjamin Franklin.
Mesmer did awaken an interest in the power of the mind, and various people studied his theories. An English physician, James Braid, decided the cures were due not to animal magnetism but to suggestion. He called his relaxation technique "hypnosis."
Notable among other practitioners was a surgeon, James Esdaille, who performed 2000 operations using only hypnosis as anesthetic--with no pain for the patients.
In the 20th century, the psychologist Milton Erickson used both verbal and nonverbal techniques to bypass the conscious mind. His work with indirect suggestion changed the face of contemporary hypnotism.
The evolution of self-hypnosis is not recorded, but we can assume that some people used it naturally and others saw what was evolving in medicine, and said, "I can do that myself."