"Mind (as well as metals and elements) may be transmuted, from state to state; degree to degree; condition to condition; pole to pole; vibration to vibration. True Hermetic Transmutation is a Mental Art." –The Kybalion
As we have stated, the Hermetists were the original alchemists, astrologers and psychologists—Hermes having been the founder of these schools of thought. From astrology has grown modern astronomy; from alchemy has grown modern chemistry; from the mystic psychology has grown the modern psychology of the schools.
But it must not be supposed that the ancients were ignorant of that which the modern schools suppose to be their exclusive and special property. The records engraved on the stones of Ancient Egypt show conclusively that the ancients had a full comprehensive knowledge of astronomy—the very building of the Pyramids showing the connection between their design and the study of astronomical science.
Nor were they ignorant of Chemistry, for the fragments of the ancient writings show that they were acquainted with the chemical properties of things; in fact, the ancient theories regarding physics are being slowly verified by the latest discoveries of modern science, notably those relating to the constitution of matter.
Nor must it be supposed that they were ignorant of the so-called modern discoveries in psychology. On the contrary, the Egyptians were especially skilled in the science of Psychology, particularly in the branches that the modern schools ignore, but which, nevertheless, are being uncovered under the name of "psychic science"—which is perplexing the psychologists of today, and making them reluctantly admit that, "There may be something in it after all."
The truth is, that beneath the material chemistry, astronomy and psychology (that is, the psychology in its phase of "brain action") the ancients possessed a knowledge of transcendental astronomy, called astrology; of transcendental chemistry, called alchemy; and of transcendental psychology, called mystic psychology. They possessed the Inner Knowledge as well as the Outer Knowledge—the latter alone being possessed by modern scientists. Among the many secret branches of knowledge possessed by the Hermetists, was that Transmutation, which known as Mental, forms the subject matter of this lesson.
"Transmutation" is a term usually employed to designate the ancient art of the transmutation of metals—particularly of the base metals into gold. The word "Transmute" means "to change from one nature, form, or substance, into another; to transform." (Webster) And accordingly, "Mental Transmutation" means the art of changing and transforming mental states, forms, and conditions, into others. So you may see that Mental Transmutation is the "Art of Mental Chemistry," if you like the term—a form of practical Mystic Psychology.
But this means far more than appears on the surface. Transmutation, Alchemy, or Chemistry on the Mental Plane is important enough in its effects, to be sure, and if the art stopped there it would still be one of the most important branches of study known to man. But this is only the beginning. Let us see why!
The first of the Seven Hermetic Principles
The Seven Hermetic Principles:
6. Cause and Effect,
7. Gender. is the Principle of Mentalism, the axiom of which is "THE ALL is Mind; the Universe is Mental," which means that the Underlying Reality of the Universe is Mind; and the Universe itself is Mental—that is, "existing in the Mind of THE ALL." We shall consider this Principle in succeeding lessons, but let us see the effect of the principle if it be assumed to be true.
If the Universal is Mental in its nature, then Mental Transmutation must be the art of CHANGING THE CONDITIONS OF THE UNIVERSE, along the lines of Matter, Force and mind. So you see, therefore, that Mental Transmutation is really the "Magic" of which the ancient writers had so much to say in their mystical works, and about which they gave so few practical instructions. If All be Mental, then the art which enables one to transmute mental conditions must render the Master the controller of material conditions as well as those ordinally called "mental."
As a matter of fact, none but advanced Mental Alchemists have been able to attain the degree of power necessary to control the grosser physical conditions, such as the control of the elements of Nature; the production or cessation of tempests; the production and cessation of earthquakes and other great physical phenomena. But that such men have existed, and do exist today, is a matter of earnest belief to all advanced occultists of all schools. That the Masters exist, and have these powers, the best teachers assure their students, having had experiences which justify them in such belief and statements.
These Masters do not make public exhibitions of their powers, but seek seclusion from the crowds of men, in order to better work their may along the Path of Attainment. We mention their existence, at this point, merely to call your attention to the fact that their power is entirely Mental, and operates along the lines of the higher Mental Transmutation, under the Hermetic Principle of Mentalism.
"The Universe is Mental" –The Kybalion
But students and Hermetists of lesser degree than Masters—the Initiates and Teachers—are able to freely work along the Mental Plane, in Mental Transmutation. In fact all that we call "psychic phenomena"; "mental influence"; "mental science"; "new-thought phenomena,"  etc., operates along the same general lines, for there is but one principle involved, no matter by what name the phenomena be called.
[1. P. Quimby (1802-1866) en.wikipedia.org/wiki/New_Thought ]
The student and practitioner of Mental Transmutation works among the Mental Plane, transmuting mental conditions, states, etc., into others, according to various formulas, more or less efficacious. The various "treatments," "affirmations," "denials," etc., of the schools of mental science are but formulas, often quite imperfect and unscientific, of The Hermetic Art. The majority of modern practitioners are quite ignorant compared to the ancient masters, for they lack the fundamental knowledge upon which the work is based.
Not only may the mental states, etc., of one's self be changed or transmuted by Hermetic Methods; but also the states of others may be, and are, constantly transmuted in the same way—usually unconsciously, but often consciously by some understanding the laws and principles, in cases where the people affected are not informed of the principles of self-protection.
And more than this, as many students and practitioners of modern mental science know, every material condition depending upon the minds of other people may be changed or transmuted in accordance with the earnest desire, will and "treatments" of the person desiring changed conditions of life.
The public are so generally informed regarding these things at present, that we do not deem it necessary to mention the same at length; our purpose at this point being merely to show the Hermetic Principle and Art underlying all of these various forms of practice, good and evil; for the force can be used in opposite directions according to the Hermetic Principles of Polarity.
In this little book we shall state the basic principles of Mental Transmutation, that all who read may grasp the Underlying Principles, and thus possess the Master-Key that will unlock the many doors of the Principle of Polarity. [priciple IV]
We shall now proceed to a consideration of the first of the Hermetic Seven Principles: the Principle of Mentalism, in which is explained the truth that "THE ALL is Mind; the Universe is Mental," in the words of The Kybalion. We ask the close attention, and careful study of this great Principle, on the part of our students, for it is really the Basic Principle of the whole Hermetic Philosophy, and of the Hermetic Art of Mental Transmutation.