The Blue Degrees are but the outer court or portico of the Temple. Part of the symbols are displayed there to the Initiate, but he is intentionally misled by false interpretations. It is not intended that he shall understand them; but it is intended that he shall imagine he understands them. Their true explication is reserved for the Adepts, the Princes of Masonry.
Having actually read M&D I don't really have to come up with a story as I know full well that he was discussing the historical Knight Templar Order and trying to draw parralels between it and the Masonic version, here are those couple of words put back into their original context:
page 818 - 819:
"Thus the Order of Knights of the Temple was at its very origin devoted to the cause of opposition to the tiara of Rome and the crowns of Kings, and the Apostolate of Kabalistic Gnosticism was vested in its chiefs. For Saint John himself was the Father of the Gnostics, and the current translation of his polemic against the heretical of his Sect and the pagans who denied that Christ was the Word, is throughout a misrepresentation, or misunderstanding at least, of the whole Spirit of that Evangel.
The tendencies and tenets of the Order were enveloped in profound mystery, and it externally professed the most perfect orthodoxy. The Chiefs alone knew the aim of the Order: the Subalterns followed them without distrust.
To acquire influence and wealth, then to intrigue, and at need to fight, to establish the Johannite or Gnostic and Kabalistic dogma, were the object and means proposed to the initiated Brethren. The Papacy and the rival monarchies, they said to them, are sold and bought in these days, become corrupt, and to-morrow, perhaps, will destroy each other. All that will become the heritage of the Temple: the World will soon come to us for its Sovereigns and Pontiffs. We shall constitute the equilibrium of the Universe, and be rulers over the Masters of the World.
The Templars, like all other Secret Orders and Associations, had two doctrines, one concealed and reserved for the Masters, which was Johannism; the other public, which was the Roman Catholic. Thus they deceived the adversaries whom they sought to supplant. Hence Free-Masonry, vulgarly imagined to have begun with the Dionysian Architects or the German Stone-workers, adopted Saint John the Evangelist as one of its patrons, associating with him, in order not to arouse the suspicions of Rome, Saint John the Baptist, and thus covertly proclaiming itself the child of the Kabalah and Essenism together.
For the Johannism of the Adepts was the Kabalah of the earlier Gnostics, degenerating afterward into those heretical forms which Gnosticism developed, so that even Manes had his followers among them. Many adopted his doctrines of the two Principles, the recollection of which is perpetuated by the handle of the dagger and the tesserated pavement or floor of the Lodge, stupidly called "the Indented Tessel," and represented by great hanging tassels, when it really means a tesserated floor (from the Latin tessera) of white and black lozenges, with a necessarily denticulated or indented border or edging. And wherever, in the higher Degrees, the two colors white and black, are in juxtaposition, the two Principles of Zoroaster and Manes are alluded to. With others the doctrine became a mystic Pantheism, descended from that of the Brahmins, and even pushed to an idolatry of Nature and hatred of every revealed dogma.
To all this the absurd reading of the established Church, taking literally the figurative, allegorical, and mythical language of a collection of Oriental books of different ages, directly and inevitably led. The same result long after followed the folly of regarding the Hebrew books as if they had been written by the unimaginative, hard, practical intellect of the England of James the First and the bigoted stolidity of Scottish Presbyterianism.
The better to succeed and win partisans, the Templars sympathized with regrets for dethroned creeds and encouraged the hopes of new worships, promising to all liberty of conscience and a new orthodoxy that should be the synthesis of all the persecuted creeds."
It is absurd to suppose that men of intellect adored a monstrous idol called Baphomet, or recognized Mahomet as an inspired prophet. Their symbolism, invented ages before, to conceal what it was dangerous to avow, was of course misunderstood by those who were not adepts, and to their enemies seemed to be pantheistic. The calf of gold, made by Aaron for the Israelites, was but one of the oxen under the laver of bronze, and the Karobim on the Propitiatory, misunderstood. The symbols of the wise always become the idols of the ignorant multitude. What the Chiefs of the Order really believed and taught, is indicated to the Adepts by the hints contained in the high Degrees of Free-Masonry, and by the symbols which only the Adepts understand.
The Blue Degrees are but the outer court or portico of the Temple. Part of the symbols are displayed there to the Initiate, but he is intentionally misled by false interpretations. It is not intended that he shall understand them; but it is intended that he shall imagine he understands them. Their true explication is reserved for the Adepts, the Princes of Masonry. The whole body of the Royal and Sacerdotal Art was hidden so carefully, centuries since, in the High Degrees, as that it is even yet impossible to solve many of the enigmas which they contain. It is well enough for the mass of those called Masons, to imagine that all is contained in the Blue Degrees; and whoso attempts to undeceive them will labor in vain, and without any true reward violate his obligations as an Adept. Masonry is the veritable Sphinx, buried to the head in the sands heaped round it by the ages.
The seeds of decay were sown in the Order of the Temple at its origin. Hypocrisy is a mortal disease. It had conceived a great work which it was incapable of executing, because it knew neither humility nor personal abnegation, because Rome was then invincible, and because the later Chiefs of the Order did not comprehend its mission. Moreover, the Templars were in general uneducated, and capable only of wielding the sword, with no qualifications for governing, and at need enchaining, that queen of the world called Opinion." [The doctrines of the Chiefs would, if expounded to the masses, have seemed to them the babblings of folly. The symbols of the wise are the idols of the vulgar, or else as meaningless as the hieroglyphics of Egypt to the nomadic Arabs. There must always be a common-place interpretation for the mass of Initiates, of the symbols that are eloquent to the Adepts.
Hughes de Payens himself had not that keen and far-sighted intellect nor that grandeur of purpose which afterward distinguished the military founder of another soldiery that became formidable to kings. The Templars were unintelligent and therefore unsuccessful Jesuits.
Their watchword was, to become wealthy, in order to buy the world. They became so, and in 1312 they possessed in Europe."