Trading Into the Indies : THE HONOURABLE COMPANY: A History of the English East India Company, <i> By John Keay (Macmillan: $25; 474 pp.)</i>

The seed from which the British Empire sprang was an obscure, tiny, wretchedly malarial island lying at the eastern end of the Indonesian archipelago. Its name, Pulo Run, sounds like a consequence of having eaten bad curries, yet it once carried such resonance that James I chose to style himself “King of England, Scotland, Ireland, France and Puloroon” (Pulo Run). Even the pragmatic eye of Cromwell took on a feverish glitter when it was mentioned. Send a shipload of good Presbyterian settlers, he commanded, with chickens and goats; it must be ours for eternity. (They were dispatched but, fortunately for them, never got there).

What excited the Brits were a few acres of nutmeg gardens. On Pulo Run 10 pounds of nutmeg cost half a penny. In Europe it retailed for 1.60--a profit of 32,000%. Europeans craved the stuff; nutmeg street values, reminiscent of those commanded by certain forbidden substances today, led a group of English speculators, in 1600, to form themselves into “The Company of Merchants of London Trading Into the East Indies.”

They came together to exploit the spices market and, almost inadvertently, changed the world. Indeed, they would eventually come to regard themselves as “the Grandest Society of Merchants in the Universe” creating their own army, navy and civil service, laying down their own laws, issuing their own currency. No multinational is likely to wield that kind of power again.

John Keay, a British historian with several outstanding books on India to his credit, has been following the Company’s Indian path since the Sixties. “The Honourable Company” was a surprise bestseller in England--corporate histories don’t usually make the lists--and it’s not hard to see why. Keay has managed to produce both a formidable work of scholarship and a ripping yarn. His story, peopled by a remarkable cast of characters, pulses with life and incident. The saga of the Honourable Company is an adventure tale on an epic scale.

Though it started in spices, the Company soon diversified into anything likely to enrich the shareholders--cotton, salt, tea, silk, saltpeter. Tiny Pulo Run soon found itself on the back burner. There were bigger fish to fry.

Its activities encouraged the insular Brits to think, for the first time, of global possibilities. And the problems they encountered along the way, ranging from matters of high statecraft to personal dilemmas (a Company man locked in a Turkish “dogge’s kennell” escaped by floating out to sea in an empty water butt) created a body of experience useful to the creation of empire.

At home they assembled the apparatus that would one day service its building the first London docks, creating the London money market. Abroad they were everywhere--in the American Colonies, China, Japan and the South Seas, starting sheep stations in Australia, failing to start the first European settlement in Southern Africa. (Ten condemned men awaiting execution in Newgate prison were put ashore in Capetown’s Table Bay but, after only a few months begged to be taken home and hanged.) They traded through Burma and Malaya, opened up the coffee ports of the Red Sea, investigated Thailand.

But the country with which their name will forever be associated, and which forms the core of Keay’s book is, of course, India.

In 1609 Capt. William Hawkins landed on the Bombay coast and journeyed to the Moghul court at Agra, Jehangir, the Emperor, took a shine to the Englishman, made him a khan, put him on the palace payroll and invited him to take a wife. Hawkins was appalled. He wanted Indian trading rights, not an Indian spouse and, blustering, told Jehangir he could only marry a Christian. To his horror Jehangir promptly produced one, an Armenian “mayden” whose father had died “leaving her ‘only a few jewels.’ ” Hawkins, a loyal Company man, gritted his teeth, endured the nuptials, won the Company its first foothold on the subcontinent.

They established a settlement at Bombay, drained the swamps, built a city boasting a hospital, an Anglican Church, a Supreme Court (which impaneled India’s first juries) and a mint “to turn the Company’s bullion exports into ruppes, xeraphins, shahls, and all the other exotic denominations then in use.” They founded Calcutta and Madras, both frightful places--the latter rendered hideously dangerous by the seas one had to negotiate to get ashore.

You had to slightly crazy to volunteer for Madras. In 1656 an open boat carrying Company personnel (including the captains of three East India ships) capsized as they sat reclining “verie merrie in discourse.” But the upturned boat contained an air pocket; after two hours inside they tore off their clothes and swam for it. Sixteen perished in the undertow but the survivors, even in this hard-nosed Company town, encountered unexpected acts of kindness. The captains were running stark naked down a road when, one recalled later, he happened upon “a good Dutchman who lent me his hat and his slippers.”

There was, about Madras, an atmosphere akin to gold rush fever. Fortunes could be made specially, Keay tell us, by subversives who--ignoring the wrath of head office in faraway London--pursued free-lance business activities in Company time.

We learn that American-born Elihu Yale, Governor of Madras in the late 1680s, dismissed by the Company for “abusing (his) position,” managed, adroitly, to keep both reputation and fortune intact. (Part of the latter he donated to “his old school, then known as His Majesty’s College of Connecticut. In 1718 the grateful trustees renamed it Yale College in his honour.”)

Keay lovingly chronicles the minutiae of business life, the efforts the Company made to keep the wheels of commerce turning. Forty tons of exotic gifts had to be hauled across 800 miles of bandit-infested country for an Emperor reluctant to grant them a special trading license. The consignment included 1,001 gold coins, a clock set with precious stones, a “unicorn’s horn,” a gold escritoire, a lump of ambergris, an ewer and basin, and a globe six feet in diameter, its place names written in Persian. The Emperor accepted the goods without comment--then kept the Brits hanging around for 18 months.

The intrigues of court life could directly affect Company profits. Executives spent much time monitoring Indian royalty, trying to read the nuances of palace politics, figuring to back the man in the ascendancy. Luck often played a part in these calculations. Only a year after they finally bade farewell to the Emperor with groin strain--clutching their precious trading license--he was deposed, imprisoned, blinded and, finally, executed by strangulation. And none of his successors, it became clear, would have granted them even a dog license. The Company enjoyed only limited popularity in ruling circles.

A Bengali Nawab named Siraj invaded Calcutta and, one night, locked 146 Britons into a detention cell measuring 18 feet by 15; only 23 survived. A Company soldier, Colonel Robert Clive, arrived to exact revenge for the “Black Hole” incident. He confronted Siraj at Plassey and defeated him; soon afterward Siraj, a victim of treachery within his own court, was assassinated. The Company sued his successor for damages, confiscated his fortune and sent it floating “downriver to Calcutta on a flotilla of barges,”

Part was handed out as prize money. Clive received 234,000--at a time when a house in Berkeley Square cost 10,000--and collected lands from the new Nawab worth 30,000 a year for life. Though he later became a baronet and governor of Bengal, he remains controversial, a great but greedy man caught, perhaps, with his hand in the till. Yet all of them, merchants and militia alike, had joined the Company to make money, exploit India.

Growing disquiet at home caused urgent corporate reappraisals. The new-look Company began concerning itself with social justice and the governance of the people, turned from a commercial operation into an administrative one. It had lost its way. India was absorbed into the Empire and, in 1858, the Company dissolved.

Keay has given us a marvelous book, deftly and engagingly written, sparkling with humor. There is, for example, a running gag about protracted attempts to persuade the peoples of the tropics to wear English tweeds which, I suspect, P. G. Wodehouse would have loved.

BOOK MARK: For an excerpt from “The Honourable Company,” see the Opinion section.