I've been involved with Magic since 1964 and slowly shifted from classic "Blackstone like" Magic into Mentalism starting in the early 80's, taking the final step away from magic in the early/mid-90s. The point being, I was working with it as well as bizarre magick long before David Blaine's first big special and the on-set of the "trend" we've seen over the past 15 or so years.
I will take exception to some of what's been stated here but only because I'm picky
Mentalism is a HUGE category ASSOCIATED with Magic... it's not one in the same though many a cynic will attempt to tell you otherwise for some very loose reasons.
Mentalism has NOTHING to do with the Fox Sisters and the out-growth of the Spiritualist movement even though it did, to some degree, grow out of that arena. Fortunately, there is much more the craft than that
Even in the days of Elizabeth I there were Mind Readers and according to certain research the practice of such demonstration (as an amusement in court) goes back to at least the time of Cleopatra. But, this is where we find the first fine line in the sand too.Much of what skeptics use as "explanations" behind certain phenomena was very much seen and known of as part of the "Magician's" craft (think Wizards, Shaman, Priests of all kinds not the buffoons working birthday parties and the Vegas strip). In fact much of the world's population in which little to no Western European influence has infected the way of life, this is still the reality. It was the auspices of early Christianity within Europe that forced the standing segregation simply because "The Church" had to prove all "Miracles" and "Magickle" things outside of what a church cleric or high patron made manifest, was deception... the devil's work... a lure to take the gullible into "darkness" etc. Even to this day certain facets of Christianity have taboos towards even watching a magic show let alone studying the art.
The Renaissance of Europe took us into the age of Intellectualism and even though this allowed the auspices of Science to resurface (after generations of oppression by the good folks that brought us the "dark ages") it is likewise an era in which Magick was being rediscovered and on multiple levels. The goals weren't to disprove the claims of things miraculous but rather, to understand them.
Understanding this side of the back-story we must ask ourselves when Magic, such as we see done on stage, stops existing as an enchantment to our mind? Is it just because we know the method (or think we do)?
I don't think so in that I've watched (from within the audience as well as in performance) too many folks gasp when the two halves of that young lady are separated or when she's floating 12 feet or more in the air... even in the late 20th and early 21st century when so many people know the basic principles associated with an illusion, it's still magical to their mind... what right does anyone have to take that from them?
With Mentalism we invoke belief rather than suspending disbelief as would be done in a magic show. The true Mentalists requires a high degree of belief or "investment" from the audience in order to create the EXPERIENCE they deliver; Mentalism is an experiential art form and not observations as magic tends to be 90% of the time. But I'm over simplifying things because we have two modes of performance...to completely different philosophies when it comes to the craft; Old School vs. New School.
Truthfully "New School" has been around for some time, the father of which is debatibly the great Joseph Dunninger who cleverly blended traditional magic with Mental demonstrations/tests. Like many of his day and even a bit before, Dunninger was an established magician that presented this style of performance as a kind of public address program -- look how real the fake psychic can be. Dunninger's approach was far more analytical, a model that would later be echoed by his faux successor Kreskin; they both borrowed from the analytical world and related research on the mind, human potential as we mastered the various hidden talents/senses that science was just then discovering, etc. It was almost mysticism coupled with intellectualism -- Sci-fi made real!
The New School mode or "Dunninger Mold" leans heavily on "Mental Magic"... a form of effect that retains very strong ties and feel with Magic (stage magic). Not so surprising this mode is far more commercially viable because it comes off as "safe" and not overly mystical boogiemanesque.
The Old School evolves directly out of Spiritualism but not in the crass sense of attacking it, such as the New School tends to do, but actually invoking the ideas tied to the older way of doing things. The majority of Old School performers do legit Readings (not the same as Cold Reading, I can assure you... I've written a few books on both topics, so trust me) they likewise work the private market such as Home PSI Parties, workshops, lectures, etc. Most Old School practitioners are partial believers... that is to say they don't completely side with the extreme views held by the Cynics, leaving the door open to probability. In fact, many a noted "Skeptic" has found himself shifting more into this arena of thought, than not... than those that evolved towards rationalism from the planes of belief.
Old School Mentalism, as Stephan Minch once put it, belongs to those that are willing to walk with one foot in the realm of theater while the other is firmly stuck in the world of the charlatan. We are willing to stoop to any low required for maintaining our one and only illusion -- the idea that we really are as we claim... that is why most old school legends were booked as Telepathists, Mediums, Clairvoyant, etc. for decades... well into the early 1970s.
But what about the disclaimers?
They used one and only one disclaimer... the fact that they were an obvious show biz ACT. To say more, they believed, was to insult the intelligence of the public while robbing them of the experience they paid to witness... as one famous performer put it "No one wants to pay to see a fake mind reader..." :roll:
The issue goes much deeper but this is a fair overview to things.
I keep seeing a drunk wearing a blindfold... bad things happening... abuse of the gift... carnies surrounding him) and too, there were the famed Tea Rooms in which a House Reader could be found along with regular demonstrations of Telepathy, Spirit Talk, etc... and we're talking about some very high end resorts that supported such things because they were so popular (Larsen mentions this in his book of Magic & Mentalism). 
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