By the time he had been two years in Bombay, Shaxton found that, under the penurious rule of the Company, efficiency was impossible, while the two European companies maintained for the defence of the island could only be kept up to strength by filling the vacancies with natives. Four years later,[3] a mutiny broke out, in which Shaxton supported the demands of his men. They complained that a month's pay, promised to them on engagement, was due to them, and claimed their discharge, as their time of service had expired. President Aungier behaved with prudence and firmness. He pacified the men by granting their demands, and brought the ringleaders to trial by court-martial. Three of them were condemned to death, of whom one, Corporal Fake, was shot, and the other two pardoned. Shaxton was then brought to trial, found guilty of some of the charges, and sent to England for punishment according to the King's pleasure.

Two years later a troop of horse was formed, and sent out under Captain Richard Keigwin, who was to command the garrison on a salary of £120 a year. Keigwin was a man of good Cornish family, who had entered the King's navy in 1665, and taken part in Monk's memorable four days' battle against the Dutch in the following year. When St. Helena was recaptured from the Dutch (1673), he had distinguished himself in command of the boats that made the attack, and was left as Governor of the island till it was taken over by the East India Company. As a reward for his services, the Company made him their military commandant at Bombay. Two years later again, the Company, in a fit of economy, reduced their military establishment to two lieutenants, two ensigns, and one hundred and eighty-eight rank and file. The troop of horse was disbanded, Keigwin was discharged from the service, and thirty soldiers, who had been detached to Surat to defend the factory against Sivajee, were refused any extra allowance, which caused much discontent. Before long the Directors became alarmed at the defenceless state of Bombay, and sent out Keigwin again with troops and artillery, to have the chief military command and the third seat in Council. To meet the expense, the other officers were made to suffer in rank and pay, and the whole of the small force fell into a dangerous state of discontent. Among other reductions in the pay of their military force, the Directors reduced the rate of exchange, a measure that affected the men as well as the officers; and, not content with making these changes prospective, insisted that the officers should refund the surplus of what they had received. Keigwin also had his personal grievance. He claimed subsistence money, like the rest of the merchants and factors, the Company's table having been abolished.[4] After much altercation, a grant was made to him, on the condition that it would have to be refunded if disallowed by the Directors. He was sick of the Company, with their greed and their selfish economies at the expense of their servants, their broken pledges and stupid changes of policy in military affairs, the intrigues of Sir John Child at Surat, and the schemes of his brother, Sir Josiah Child, in England. Like many other Englishmen, he considered the Company was an anomaly, dangerous to the authority of the Crown, and his distrust was increased by the mismanagement and corruption that existed among their servants in the East.

On the 27th December, 1683, he seized Mr. Ward, the Deputy Governor, and such of the Council as sided with him, assembled the troops, and issued a proclamation declaring the Company's authority at an end, and that the island was henceforth under the King's protection. By general consent he was elected Governor, and at once proceeded to restore order. The troops and inhabitants were called on to take an oath of allegiance to the King, and to renounce their obedience to the Company, a demand that was universally complied with. Officials were appointed, grievances were redressed, and trade was encouraged, to be carried on without molestation so long as Keigwin's authority was not challenged. Money arriving from England was lodged in the fort, with a declaration that it would be employed only in defence of the island, and letters were addressed by Keigwin to the King and the Duke of York, stating his determination to hold the island for the King till his Majesty's pleasure should be known, together with the causes that had led to the revolt; one of them being the necessity of preserving it from becoming a conquest to the native powers.

Never had Bombay been so well governed as it was during the eleven months of Keigwin's rule. The Seedee sent a friendly deputation to him. From the Rajah of Satara he obtained confirmation of the articles agreed on by Sivajee, a grant for the establishment of factories at Cuddalore and Thevenapatam, an exemption from duties in the Carnatic, and the payment of twelve thousand pagodas in compensation for losses sustained at different places formerly plundered by the Mahrattas. There was no disorder or bloodshed; the only thing of the kind that has been recorded being a wound received by Keigwin himself in a quarrel at table. So great was the enthusiasm for Keigwin, that when, first commissioners, and then Sir John Child himself, came from Surat to try and re-establish the Company's authority, it was with difficulty that the crews of their vessels could be prevented from joining Keigwin and his adherents.[5] It was well for the Company that he was a man of solid character and not an adventurer. On the arrival of Sir Thomas Grantham from England in November, 1684, Keigwin surrendered the island to him, as a King's officer, on condition of a free pardon for himself and his associates, and proceeded to England.[6] The Company's treasure was intact, and, except for the dangerous spirit against the Company that had been aroused, Bombay was in a better state than it had been at the time of the revolt.

After this the Company decided to have nothing more to do with professional soldiers. It was the time when the great feeling of hostility to a standing army was growing up in England, under the mischievous preaching of agitators, which reached its height thirteen years later. They took into their service men of low origin, devoid of military training, who would have no influence over their men, and who would submit to any treatment. Boone, writing to the Directors in 1720, says—

"It is well known the Company's servants, in all the settlements I have been in, seldom keep company with the military, especially the Council. Now and then they may invite one to take a dinner, which is a favour; but the men which he distinguishes are not company for your second."

The social status of the Company's officers appears later, when an Act was passed to extend the Mutiny Act to the East Indies and St. Helena, in consequence of the Company's right to exercise martial law having been questioned. In opposing the bill, the Earl of Egmont said—

"If I am rightly informed, there are some of the Company's officers of a very low character. One of them was formerly a trumpeter at a raree show in this country, and when he was discharged that honourable service he listed himself in the Company's service as a common soldier, and I suppose was made an officer by one of those governors for trumpeting to him better than any other man could do it in the country. Another, I am told, was a low sort of barber—one of our shave-for-a-penny barbers—here in London. And another of them was a butcher here, and when he is not upon duty I am told he still exercises his trade there. Can we think that such officers will not be despised by gentlemen who have the honour to bear his Majesty's commission?"

He based his opposition to the bill on the unfitness of the Company's officers to exercise authority, and to the bad relations sure to arise between them and the King's officers.[7]

In quarters they were not allowed to give any orders to their men, or to have any control over them, the most trivial matters being kept in the hands of the merchants and factors. To such an extent was this carried, that for fifty years afterwards no military officer was allowed to give out the parole and countersign.[8] Their only duties were to command the men when under arms. Commissions were granted and taken away by the Council without reference to the Directors.