John Macarthur, seen as the creator of the Australian wool industry, although his wife Elizabeth deserves the title more than he, precipitated the crisis. Macarthur had arrived with the NSW Corps in 1790 as a lieutenant and by 1805 had substantial farming and commercial interests in the colony. He had quarrelled with governors Hunter and King and had fought two duels. Michael Duffy sees his acute sense of the code of honour as the key to his character and actions. He challenged Bligh to what was, in effect, a political duel in defence of both his honour and his money. Macarthur was as offensive, domineering, short-fused and arrogant as Bligh, but had an unscrupulous shrewdness, indeed subtlety that Bligh both lacked and could not discern in others. Clearly, from the beginning of Bligh’s rule, Macarthur saw him as a powerful obstacle to the realisation of his ambitions. Bligh and Macarthur’s interests clashed in a number of ways.
Macarthur’s wealth was regarded by Bligh as the most offensive example of private profit at public expense. He was determined to confine and reduce it. Bligh refused to make a major land grant that Macarthur thought he had negotiated in London. His tone was dismissive: ‘Are you to have such flocks of sheep and such herds of cattle as no man ever heard before. No sir!’ Macarthur was right to stress the shortage of herdsmen. Convict labour was scarce. No prisoners had arrived in 1805 and only about 550 males in 1806 and 1807, fewer than those freed by effluxion of time; but the shortage never affected the farm which Bligh himself had bought on the Hawkesbury. Bligh stopped Macarthur from cheaply distributing large quantities of wine to the Corps. He also halted Macarthur’s allegedly illegal importation of brewing stills. In March 1807, a still for Macarthur arrived in Sydney, sent unannounced by his London agent. Bligh impounded it as illegal. Macarthur successfully argued to have the copper body, with goods inside, sent to his private store.  In October 1807, Naval Officer Robert Campbell sent his nephew to retrieve the still from Macarthur’s store for return to England under Bligh’s order. However, his nephew had no official status and Macarthur successfully sued for wrongful seizure. Macarthur was less successful in a case of debt. Andrew Thompson, a pardoned convict who became Chief Constable under Hunter and a successful farmer, businessman, builder and trustee for Hawkesbury settlers, was manager of Bligh’s farms and received land grants from him. Before the 1806 floods, Macarthur bought a debt owed by Thompson, made out in bushels of wheat. After floods, price of wheat increased tenfold and Macarthur tried to enforce payment in wheat that was now ten times the price when debt was made. The court determined that the debt was for original value, not amount, of wheat. Macarthur appealed but in July 1807 Bligh intervened, dismissing the appeal.
Macarthur’s interest in an area of land granted to him by Governor King conflicted with Bligh’s town-planning interests. In December 1807, Bligh challenged Macarthur’s lease on Church Hill, given by governor King despite Phillip’s order of no private leases in Sydney town and on 20 January 1808 ordered the demolition of the fence on the lease Macarthur had begun six days earlier. Macarthur and Bligh were also engaged in other disagreements, including a conflict over landing regulations. In June 1807, John Hoare a convict had stowed away and escaped in the Pacific Islands on the Parramatta one of Macarthur’s vessels. In December 1807, when that vessel returned to Sydney, the £900 bond to the NSW government for assisting escape was deemed to be forfeited. The ship was consequently impounded. Macarthur now refused to pay or victual the crew, forcing them on 14 December to come ashore illegally breaching the landing regulations. In effect, he abandoned a ship worth £10,000 rather than pay a fine of £900.
Joseph Lycett, Residence of John Macarthur near Parramatta
Bligh had the Judge-Advocate, Richard Atkins, issue an order for John Macarthur to appear on the matter of the bond on the 15 December 1807. Outraged, Macarthur sent an angry reply declaring his contempt for Atkins and the government. The following day, Atkins issued warrant for Macarthur’s arrest. Macarthur demanded to be brought before bench of magistrates. They granted him bail on condition he appeared again the following day where magistrates, including George Johnston, commit Macarthur to criminal trial and he was bailed to appear for trial at the next sitting of the Sydney Criminal Court on 25 January 1808. However, the Court did not define the charges. The court was constituted of Atkins and six officers of the NSW Corps: Anthony Fenn Kemp, John Brabyn, William Moore, Thomas Laycock, William Minchin and William Lawson. Macarthur objected to Atkins sitting in judgement of him because he was his debtor and inveterate enemy and read from a lengthy document declaiming towards the conclusion
You will now decide, gentlemen, whether law and justice shall finally prevail...You have the eyes of an anxious public upon you, trembling for the safety of their property, their liberty, and their lives. To you has fallen the lot of deciding a point which perhaps involves the happiness or misery of millions yet unborn. I conjure you in the name of Almighty God, in whose presence you stand, to consider the inestimable value of the precious deposit with which you are entrusted.
This was grossly exaggerated. He then gave the Corps its rallying call:
It is to the Officers of the New South Wales Corps that the administration of Justice is committed; and who that is just has anything to dread? 
Macarthur’s ranting about the defence of liberty and property that were never in danger, gave Johnston excuse to claim that ‘insurrection and massacre’ were imminent because Bligh was planning ‘to subvert the laws of the country’ and ‘to terrify and influence the Courts of Justice’. 
Atkins rejected this, but ‘Macarthur’s protest had the support of the other six members of the court, all officers of the Corps. Atkins threatened to gaol Macarthur. Kemp retaliated by threatening to gaol Atkins who left for Government House, declaring that there was no court without him. In 1803, a similar manoeuvre had been tried. Kemp was defendant in a court case and this time Johnston, the acting commanding officer of the Corps, demanded that the Governor, King, replace the Judge-Advocate, John Harris. King buckled and replaced Harris. Bligh, however, stood firm. During the day, messages went backwards and forwards between the court and Government House over the position of Atkins. Around 12.30 pm, Bligh made it clear that he had no power to remove Atkins and without Atkins there was no validly constituted court but the officers refused to serve with Atkins. At 3.30 pm, Macarthur sought military protection due to unspecified threats. At 5.30 pm Bligh wrote to George Johnston, asking him to come to Government House. It is noteworthy that Bligh wrote to Johnston in order to attempt to resolve this impasse rather than immediately resorting to action. Johnston sent a message to say he was too ill, as he had wrecked his gig on the evening of the 24 January on his way back home to Annandale after dining with officers of the Corps. It was increasingly clear that an impasse had been reached.
 Craig, R.J. and Jenkins, S.A., ‘The Cox and Greenwood ledger of the New South Wales Corps 1801-1805: the account of Captain John Macarthur’, Journal of the Royal Australian Historical Society, Vol. 82, (2), (1996), pp. 138-152.
 Ibid, Duffy, Michael, Man of Honour: John Macarthur-Duellist, Rebel, Founding Father, p. 255, n 10.
 Bligh to Windham, 31 October 1807, HRA, Series I, Vol. 6, pp. 160, 164-178 details the question of Macarthur’s still.
 Surveyor-General Grimes to Macarthur, 13 January 1808, HRNSW, Vol. 6, pp. 413-414 ordered Macarthur not to build on the lease on Church Hill with Macarthur’s response reluctantly resigning the land to please Bligh if Bligh allocated him as alternative lease. The matter escalated the following day with correspondence between Grimes and Macarthur in which Grimes made it clear that Macarthur’s proposal was unacceptable and that he was unwilling to receive further correspondence on the issue: HRNSW, Vol. 6, pp. 416-417.
 Macarthur’s ship and the Runaway, 27 June 1807, HRNSW, Vol. 6, p. 270.
 Bennett, J.M., ‘Atkins, Richard (1745-1820)’, ADB, Vol. 1, pp. 38-40.
 See Macarthur to Atkins, 20 January 1808, HRNSW, Vol. 6, p. 418 and subsequent correspondence on the imprecise nature of the charge, HRNSW, Vol. 6, pp. 418-420.
 During January 1808, Macarthur had tried to recall debt he held against Atkins but Bligh refused Macarthur’s requests to assist his recovery of debt. See Macarthur to Bligh, 29 December 1807, HRNSW, Vol. 6, pp. 395-396 and Macarthur to Bligh, 1, 12 January 1808, HRNSW, vol 6, pp. 411-412, 413. On Macarthur’s ‘trial’, see the succinct discussion in Woods, Gregory D., A history of criminal law in New South Wales: the colonial period 1788-1900, pp. 33-34.
Johnston to Castlereagh, 11 April 1808, HRA, Series I, Vol. 6, p. 227.
 Johnston to Castlereagh, 11 April 1808, HRA, Series I, Vol. 6, p. 227.
 For Macarthur’s trial on 25-26 January 1808 see, HRNSW, Vol. 6, pp. 422-433 and Johnston to Castlereagh, 11 April 1808, HRA, Series I, Vol. 6, pp. 221-234.
 Secretary Griffin to Johnston, 25 January 1808, HRA, Series I, Vol. 6, p. 234.