Oh wow, I was just reading about this yesterday in Coders At Work[0]. Douglas Crockford[1] worked on this at a company that was trying to do some distributing computing work in the 90s-00s. They originally based it off the JVM but SUN had issues with that so they turned it more in to what he described as a scripting language "which is what we have today."
So in the beginning Electric Communities was going to do large-scale, distributed virtual worlds (think MMORPGs as shopping malls...) with real security. The original plan was to use Joule, but negotiations didn't work out and while waiting around a couple of engineers created a reasonable subset in this new language called java. This subset eventaully because the original E language. Crock was the slides and presentations guy of the core team, so after knowing him for a while as mostaly a non-coder it was odd to see him pop up again and have such a big impact on the javascript world.