Published in Astounding Science Fiction, March 1951. Reprinted as The Illusionists in the Andre Norton edited Space Police in 1956. Collected under its original name in
Now a full-fledged Zone Agent, Pagadan is sent to the Ulphi system where the millions of inhabitants are being secretly controlled by a powerful telepathic weapon which has instilled in them all a dreadful fear of leaving the planet. Pagadan must find the person who has now set himself up as the unofficial dictator of that world.