WHAT'S BRED IN THE BONE. By Robertson Davies. Viking. 436 pp. $17.95.

ROBERTSON DAVIES is the sort of novelist readers can hardly wait to tell their friends about. Not that he's precisely unknown, even for a Canadian. A passionate fellowship exists among admirers of his "Deptford Trilogy": Fifth Business, The Manticore, and World of Wonders. Last year his urbane ghost story collection, High Spirits even received the World Fantasy Award. When he lectures -- as he did recently at the Library of Congress -- the house sells out. With his out-of-date, high- buttoned suits, a handkerchief up his sleeve like a priest or a magician, and his imposing white beard, he calls to mind a genial sorcerer, an alchemical marriage of Prospero and Faust and Santa Claus.

His books reinforce this impression. If Garc,ia M,arquez practices "magic realism," then Davies specializes in what might be called "melodramatic realism" -- his fiction mingles the supernaturalism of Le Fanu, the mystery of Wilkie Collins, the plummy richness and archetypal figures of Dickens. In What's Bred in the Bone he includes, to mention only a few: an idiot child, a bartered bride, a father and son spy team, several faked paintings, Nazis, Oxford communists, the Holy Grail, astrology, King Arthur's Tintagel, a dead dwarf, a millionaire art connoisseur, Bronzino's Allegory of Time, and a pair of angels. Being Davies, he weaves them all together so beautifully that a reader just sighs with pleasure as he turns the pages.

"What's bred in the bone comes out in the flesh": using this proverb Davies traces the largely unhappy, though often comic, history of Francis Cornish, the eccentric Canadian art collector whose death provided the motor for his previous novel, The Rebel Angels. The new book addresses several large issues -- the Jungian search for a completion of the self in love, the nature of biography, the working out of pattern and coincidence in life -- but perhaps the most important is the growth of Francis' artistic understanding. The young boy, neglected by his parents, confused by his family's mixture of Anglicanism and Catholicism, picked on at school, finds solace in drawing and studying pictures. One day, hoping to learn anatomy, he persuades the local embalmer, a raffish character named Zadok Hoyle, to let him observe his work. The evenings that follow prove a revelation, determining -- in several unexpected ways -- the character of Francis' life.

"Old McAllister was balding and scrawny. His face and hands were tanned a deep brown by sixty-seven years of Ottawa Valley weather, but the rest of him was a bluey-white. His legs were like sticks, and his feet fell outward and sideways. Zadok had cut off his underwear because Old Mllister, according to local custom, had been sewed into it for the winter. Francis knew all about that; most of the children in Carlyle Rural were so encased and they stank amazingly.

"'A bath, for a starter,' said Zadok. 'First, though, a thorough swilling out. . .' With a dribble from a short hose, and frequent dabblings of carbolic, Zadok washed Old McAllister; the water fell to the cement floor and vanished down a drain. He washed Old McAllister's hands, with plentiful lathering of yellow soap, and cleaned the nails with his jack-knife.

"'Always a problem, this,' he said to the busily scribbling Francis. 'These fellas never clean their hands from Easter to Easter, but they have to have hands like a barber for the viewing. It's part of the art, you see. At the end they must look as they'd have looked on their wedding day, or better. Probably better.'

"He shaved Old McAllister with ample lather and hot water. 'Lucky I had some experience as a valet . . .'"

Several delicate operations later. Zadok finishes Old McAllister's transformation. "He combed the hair with a left-hand parting, then quiffed the right-hand portion over his finger, giving Old McAllister a nifty, almost a dandified air. Quick work with the collar, the necktie; into the waistcoat, draping a huge silver watch-chain, from which the watch had been removed, over the sunken belly. On with the coat. A piece of card on the tip of which some white cambric was sewn was tucked into the breast pocket of the coat (Old McAllister had not used, or possessed, handkerchiefs of his own). The hands were folded on the breast, as if in Christian acceptance, and Old McAllister was a finished work of art."

WITHOUT undergoing the courteous attentions of Zadok Hoyle, over the past 72 years Robertson Davis has shaped his public self into a highly finished work of art. Born in 1913, Davies was the son of a newspaper publisher who eventually became a self- made millionair. After schooling in Canada, he attended Oxford, where he wrote a thesis on the boy actors in Shakespeare, and subsequently joined the Old Vic acting company. He worked with its director Tyrone Guthrie from 1938-1940, married, and returned to Canada, spending the next 20 years as a literary journalist. He reviewed regularly (a special interest being Canadian culture), created a crotchety alter ego named Samuel Marchbanks whose diary graced the pages of the Peterborough Examiner, and eventually became that newspaper's editor and publisher.

Throughout the 1940s and '50s Davies focused his deepest creative energies on the theater, writing plays and drama criticism. In the early '50s he did manage to produce three comic novels, frequently dubbed the Salterton trilogy (after their chief locale): Tempest Tost deals with intrigues and love affairs behind the scenes at a provincial production of The Tempest; Leaven of Malice with similar shenanigans at a university and newspaper; and A Mixture of Frailties with the education and fortunes of a singer.

By 1962 Davies had become a prominent and versatile Canadian man of letters. So it could hardly have been surprising when he began to teach 19th-century drama and melodrama at the University of Toronto. The following year he was elected master of Massey College, a position he kept until his recent retirement. Besides performing normal academic duties, Davies also established an 18- year tradition of reading an original ghost story at Massey's christmas dinners. They were, he said, his attempt to invest a little magic and mystery into the new institution.

Davies' curious knowledge of the supernatural grew out of his passion for melodrama, with its archetypal villains and virgins, and was bostered by his long study of Jung, an interest in saints' lives, much reflection on religion, insanity and Evil, and virtually an adept's understanding of alchemy, rology, the Tarot and conjuring. All these elements of arcane learning come together in the three Deptford novels, which trace the interlocking lives of several characters, chiefly the haunted schoolmaster Dunstan Ramsay, the millionaire Boy Staunton, and the magician known as Magnus Eisengrim. Their story has become a modern classic.

In an interview Davies has suggested that What's Bred in the Bone will be the middle volume of another trio of linked novels. The Rebel Angels focused on love among the learned, chiefly that of several professors for a beautiful gypsy graduate student named Maria Theotoky. In form the book resembled one of the "conversation" novels of Peacock or Aldous Huxley; an assembly of oddball characters quarrel and discourse about love, philosophy, religion and other lofty matters before all ends happily in a marriage. What's Bred in the Bone portrays a kind man who enjoys triumphs as a painter and art critic, love affairs, Reilly-like spy adventures, and great wealth, but never finds reciprocated affection: Of all the pictures in Francis Cornish's art collection the most important is a reproduction from his childhood entitled Love Locked Out depicting a little boy weeping at a closed door. The third book, it can be surmised, will take up some other aspect of love, perhaps that of the married life.

For now Robertson Davies' fans will have to rest content with the world of wonders in What's Bred in the Bone, a book as laced with marvels, subterfuge, and melodramatic coincidence as Fifth Business. Its only flaw lies in the rather rushed account of Francis' years of fame; perhaps we will learn more of them in the future. I'm sure that the old magician has more than a handkerchief tucked up his sleeve.