The effective beginnings of Melbourne long preceded the official foundation of the town by Governor Richard Bourke on 19 May 1837. Surveyor Charles Grimes, sent by Governor King to explore Port Phillip, had reached the future site of Melbourne on 4 February 1803 and reported it a 'most eligible place for a settlement', but there was no further interest until 1835, when John Batman, one of a group of Van Diemen's Land (Tasmanian) investors and pastoralists (soon to be expanded into the Port Phillip Association) visited to search for good pastoral land. He claimed to have bought 600 000 ac (about 240 000 ha) from the Woi wurrung people. He did not see the site of Melbourne - though a boatload of his men visited it while waiting for a fair wind to sail for his depot on Indented Head near the mouth of the bay - but the report he made on his return to Launceston certainly stimulated the already growing interest in the northern side of Bass Strait and led to John Pascoe Fawkner's plans for planting a settlement in the vicinity.
Interested in the rumours about the land, Fawkner bought the schooner Enterprize in April 1835, but he could not take delivery until 14 July, which was after Batman had returned from his reconnaissance. Fawkner wanted to sail at once, but his debts stopped him from leaving the colony and bad weather held up the ship. It sailed without Fawkner on 4 August, with a merchant seaman, Captain John Lancey, in charge, and carrying three passengers and four servants, who together included four artisans, as well as the multifarious provisions that he had bought in Launceston. Fawkner - publican, builder, timber-merchant, auctioneer and newspaper-owner - was no pastoralist, but already he and his passengers were thinking of settling.
After searching for a site in Western Port and along the east side of Port Phillip, Lancey found the spot recommended by Grimes 32 years before. He warped Enterprize up the Yarra River to the site of the Yarra Falls (near the present Queens Bridge), which held back the tide and so provided access to fresh water, and on 30 August he moored the schooner alongside the bank at the foot of the hill where the Customs House now stands. Three days later he had discharged his cargo, built a store for it and begun to clear 5 ac (2 ha) for planting wheat and vegetables; when he sailed on 3 September, five of the party remained to look after what had been done.
Meanwhile, on 2 September, Batman's partner, John Helder Wedge, had come up from Indented Head to see what was happening and a fortnight later settled with his party, including Batman's brother Henry, alongside the Lancey and Fawkner group. On 16 October, Fawkner was back, with more supplies for the settlement: flour, bricks, paling, nails, planks, books, earthenware, furniture, clothes, calico, butter, pork, beef, tea, five horses, two cows, gin and porter. By the end of the month, his two-roomed turf hut on the corner of the future William Street and Flinders Lane was roofed, and it opened as a hotel on 7 November. By January more than a hundred others had arrived, with 1750 sheep and over 50 cattle. Despite Governor Bourke's proclamation on 26 August 1835 that all at the settlement were trespassers, by 1 June 1836 there were 177 residents with 26 500 sheep. The pastoralists mostly occupied land on the Maribyrnong River, but their base at Melbourne, then called Bearbrass, was firmly established, even if it consisted of only three weatherboard buildings with 10 slab or turf huts and a number of tents dotted about the hillside. By February Fawkner's hotel had grown to six rooms, though of a 'very primitive order', but Batman's 'Mansion House', just west of modern Spencer Street, a mud hut 20 ft by 12 (6 x 3.7 m), with chimneys built with bricks from Van Diemen's Land, was large enough to accommodate more than a dozen people.
Of course all this was on land occupied by Aboriginal people who had been there for more than 50 000 years. There were about 700 members of three clans living within 50 km of the new settlement, chiefly members of the Wurundjeri clan of the Woi wurrung people, and about 300 seem to have watched the landing. They had seemed friendly enough to the new arrivals, who according to Fawkner 'fed them well with biscuits and potatoes - and made many little presents of clothing', but visiting tribesmen from up country were less cordial and Fawkner asserted that a young warrior known as Derrimut twice saved the settlers by timely warning of a threatened massacre. The story is doubtful, though it was recorded in 1864 on Derrimut's tombstone in the Melbourne General Cemetery, but relations with Kulin peoples were more often smoothed by William Buckley, a survivor from the 1803 penal party, who had spent the intervening years with the Watha wurrung clan near Corio Bay. The fate of Aboriginal people had early attracted Governor Bourke's attention. In November 1835 he had proposed to reserve land for them for native villages to be supervised by Christian missionaries, and the next May he sent the magistrate George Stewart to investigate some reported outrages, a visit that led to the first official report on the settlement.
Before he could act on this report, Bourke received official instructions from London to dispatch an official party under Captain William Lonsdale to take charge of the settlement. Lonsdale was to act as magistrate and to carry out the general superintendence of the district. He was also to protect and conciliate Aboriginal people, to settle them in a village and to encourage them to work, a task delegated to the Anglican George Langhorne, who established a reserve on about 900 ac (360 ha) on the south bank of the Yarra about three kilometres from the settlement, near the modern Anderson Street. Lonsdale did little about regulating settlement. The surveyors concentrated on the bay and rivers, and though Robert Russell, their principal, drew a 'feature plan' of the site, he proposed no street alignment, and buildings, including the few framed houses brought over from Van Diemen's Land, were scattered higgledy-piggledy over the hillside behind the landing-spot.
The visit of Governor Bourke on 1 March 1837 brought a change. He confirmed the site, proclaimed the town, declared a public holiday, announced a land sale and promised the Aboriginal people he would later look after them. Then, with Robert Hoddle, soon to be put in charge of the survey in Port Phillip, and using Russell's feature drawing as a base, he traced the general outline of a township. It was a standard rectilinear grid aligned along the river and therefore ignored existing huts, both private and official, but it meant that on 21 March Hoddle was able to start marking out allotments (and public reserves) for the land sale that would bring order to the occupation. Hoddle persuaded the governor to allow the streets to be 99 ft (30.2 m) wide, instead of the usual 66 (1 chain, or 20.1 m), though the latter then insisted on Melbourne's distinctive lanes (or 'little' streets) in between to allow for entrances to building blocks from behind. Thanks to the surveyor's speedy work, he was able to hold the land sale, covering the western end of the future Central Business District, on 1 June.
Pictured taking bids on a fallen log or tree stump, before a crowd of about 200 people, Hoddle auctioned 100 half-acre (0.2 ha) lots with an upset price of £5 payable within a month for a total of £3842, the dearest being on the corner of William and Collins streets, which realised £95, and the average about £38. All buyers now had freehold and were supposed to put up a house within 12 months - though not all did so. Some were glad to sell at a profit in the boom years that followed. In September 1839, for example, Charles Ebden sold three lots he had bought for £136 for over £10 000, and Fawkner sold a £32 lot in 1840 for £6000, but others built their houses, offices and stores. In 12 months, the blocks bounded by King, Collins, Elizabeth and Flinders streets had nearly a score of brick houses, 10 hotels, two breweries, a wooden post office, a police court and lock-up, a large brick printing office, a skittle alley, a gunsmith's and a carpenter's shop, a timber yard, a grocer, a butcher and a baker, a brick kiln and the brick Bank of Australasia, while on the north side of Collins Street were four more hotels, a drapery store, a cooperage, a wheelwright, a tailor, a tobacconist, a builder, a chemist's shop and an undertaker. By 1840, the professions were 'well stocked with parsons, doctors, lawyers, architects and auctioneers', along with stock and station agents, importers and merchants. Melbourne's inhabitants could readily buy provisions, clothes, hardware and timber supplies brought in from Launceston and transact their daily business. After two years of land sales, progress had been considerable. By November 1837, the sale of 195 allotments had brought in £11 500 and taken the settlement east of Swanston Street, and there were 10 substantial residences, three of brick. More than 1000 people - one-third females - were living in the town, at least four-fifths from Van Diemen's Land, including many ex-convicts. Even so, in March 1838 the newly arrived Congregationalist minister, the Rev. William Waterfield, thought the place looked as if its inhabitants were preparing for a 'rural fair, many of the buildings being more like booths than houses'.
This was partly because government infrastructure had not kept pace with development. Free labour was scarce and expensive, and Bourke had sent down only 40 convicts (including only 10 skilled mechanics) with Lonsdale in 1836, apart from those assigned to the surveyors. The 50 who arrived in the following year were still woefully inadequate for the public works needed. By 1839 a jetty at Williamstown was the only permanent structure completed. All the official buildings were small and dilapidated; there was no public wharf, no dam across the river and no punt either. The roads were said to have 'looked like porridge' - muddy, undrained, ill lit and covered with tree stumps - but clearing and draining them were beyond Lonsdale's resources.
October 1839 saw the arrival of Superintendent Charles Joseph La Trobe, but he could do little without Sydney's approval and was still hog-tied by shortages of money and labour. But in the three years from 1839 to 1841, more than 1100 immigrants arrived in the district from the United Kingdom, raising Melbourne's population to 4500 in March 1841 and to nearly 8000 by the end of 1842, almost balancing the sexes and drastically reducing the proportion of ex-convicts. Unfortunately housing such an influx placed an enormous burden on the district's resources, and Sydney refused to allow many to be employed on public works. By June 1840 town land sales extending to Spring and Lonsdale streets had totalled 117 ac (47 ha), bringing in more than £23 000. More than 3000 ac (nearly 5 sq. miles or 1250 ha) were sold within eight kilometres of the town at an average of over £10 per acre, chiefly in Fitzroy, Collingwood, Abbotsford and Richmond. To the west and south lay swamps and the river, and to the north were several public reserves - the Flagstaff Gardens, the cemetery (now the Queen Victoria Market) and the cattle yards up Elizabeth Street. But the north-east was more enticing, as 25-acre (10 ha) suburban allotments were sold in New Town (Fitzroy and Collingwood), still a 'dense gum forest' whose 'many lovely spots' were 'the chosen resort of the principal inhabitants'. As this forest was cleared for firewood, workers' cottages appeared as the original blocks were subdivided, and the population grew from 600 in 1841 to nearly 3000 in 1850. East Melbourne remained largely a government reserve, but most of the western side of Richmond was sold in good blocks by 1840, to be divided by speculators, though more slowly than in Collingwood.
South of the river, difficulty of communication and flooding in South Melbourne restricted settlement, though there were a number of substantial properties with a few vineyards along the river in South Yarra. A few settled near the beach at St Kilda (population 60 in 1846), but Prahran remained a forest and South Melbourne (Emerald Hill) a stock run. Further afield the biggish properties in Pentridge (Coburg), Brunswick and Heidelberg, and along the bay in Brighton, were subdivided; villages appeared, but they remained in a rural atmosphere. There were more than 350 people living between Merri Creek and Moonee Ponds Creek in 1841, including the inhabitants of Fawkner's model village at Pascoe Vale, and 400 at Brighton, but there were barely half that number at Heidelberg, where flooding from the Yarra impeded agricultural development, and only about 100 in Camberwell.
Progress in town followed what was to become a familiar Australian pattern: boom, bust and a slow but successful recovery. The boom followed good wool prices and a very strong market for sheep as more and more pastoralists took up runs. Government revenue rose with increasing land sales, too often on credit as three banks were established and made advances readily. Builders were increasingly busy as immigrants flowed in, and so of course were storekeepers; two newspapers had begun business by 1839, and a third the next year.
Intellectual and social pursuits were stimulated by the foundation of the Melbourne Club in 1839, the Mechanics Institute and the first Masonic Lodge in Australia Felix in 1840, and a debating society in the following year. Horseracing began in 1837, and in March 1840 the first meeting was held on the site of the future Flemington racecourse. Irregular cricket matches began in 1839, and three regular clubs came into existence in 1842. Melburnians were ready to support the churches, which were offered land grants and limited financial aid by the government. By 1839 all the major denominations had resident clergy and temporary chapels, and permanent churches soon followed. But churchgoing was largely confined to 'people of sober habits', as Bourke put it, and most of the population were thought 'lax in their morals and indifferent about their immortal interests'. It seems that in 1850 only about one in eight of the population could be regarded as a churchgoer, compared with one in three in the United Kingdom; certainly in Melbourne the churches could accommodate only about one-eighth of the city's population of 23 000.
Aboriginal people continued to hold corroborees with visiting clans at various sites around the town, including a large one in March 1839 on the centuries-old site by the Yarra where the Royal Botanic Gardens now stand, and another near today's St Kilda Junction in 1841, but most who had formerly lived in the area were forced away in the early years of settlement. Langhorne's mission had closed in 1839, and while Wesleyan minister Joseph Orton might appeal on behalf of 'these poor degraded creatures', few of the white population were inclined to listen, and there was frequent conflict between men of the two races. With their traditional way of life largely destroyed, deprived of their land and their food, labouring under dysentery, typhus, syphilis, rheumatism, acute catarrh, influenza and other pulmonary diseases, many became beggars. Some were killed by violence, but disease and destitution were the lot of many others and the birthrate fell drastically.
By 1840 the settlers were incurring heavy short-term losses. With depression in England, the price of wool fell, and so did the demand for stock; the squatters moved further out, thus increasing transport costs, and those who had opened up their runs in 1839-40 had to wait two years for their first returns while trying to live on credit at high interest rates. The land market was glutted; land sales ceased, and land revenue almost disappeared. The government had to withdraw its deposits from the banks, which began to call in their loans. Immigration stopped after 1842, when the government withdrew its subsidy; speculators who had hoped to subdivide and sell their properties could not do so. Declining business and credit forced many mortgages to be foreclosed and borrowers to go bankrupt. Between 1842 and 1845, 294 of the settlement's 1000 businesses became insolvent, with liabilities over £800 000; as one squatter wrote in 1843, there was 'no money, no credit, no trade, nothing but failures ... Land is worthless and cattle and sheep little better'.
Thereafter conditions slowly improved. The pastoral industry recovered and gave the district, with its entrepot in Melbourne, a firm economic base. Although overseas immigration ceased until 1848, nearly 10 000 people came from Van Diemen's Land and New South Wales. By 1848 there were more than 50 000 in the district, nearly 15 000 of whom lived in Melbourne. The arrival of 18 500 from the United Kingdom in 1848-50 helped to raise the district's population to over 75 000, with 23 000 in town, and gave employment to clothing manufacturers and food-providers. But timber-cutting for firewood and industrial furnaces was rapidly destroying the bush. Noxious trades - such as the six tanneries, three boiling-down works, four soap manufacturers, slaughterhouses, fellmongers and brickmakers - were troublesome, especially when sited down-river where the prevailing westerlies could blow their smells and smoke over the town. Less unpleasant were the six breweries, four flour mills and the Langlands Foundry in Flinders Street. Other improvements appeared. The market dated from 1841; the long-awaited stone Customs House was completed, and Supreme Court sittings began. In 1842 the town was incorporated with a 12-member council; this quickly set a tradition of personal bickering and quarrelling with the government - a situation that the conversion of the town into a city, following the appointment of a Church of England bishop in 1847 and legislation in New South Wales in 1849, did not change. However, in 1846 a two-storeyed government office building replaced Batman's former cottage, and the Melbourne Bridge Co. built a wooden bridge over the Yarra. The opening of the stone Princes Bridge, in November 1850, provided a great stimulus to development south of the river.
But bringing goods up the river was a problem, as ships and lighters could draw only 7 ft (2.13 m), and machines to dredge the mud banks had not been able to achieve much by 1850. At the town site, the official wharves were of unsuitable timber, with inadequate sheds, and were often damaged by floods. George Cole built a private wharf and dock in 1841 at a cost of £60 000, but owing to lack of drainage, which was not remedied until 1848, the road approaches to it were described as 'dangerous in the extreme for loaded carts'. However, La Trobe had set aside land for Botanic Gardens in 1846; two years later a long-postponed powder magazine was finally opened west of Batmans Hill, facing the West Melbourne Swamp; the new (Royal) Melbourne Hospital replaced Fawkner's overcrowded two-storey house in Bourke Street, and an asylum opened in Kew - these institutions valuably supplementing the charitable work of various friendly societies, the lodges and the churches. By 1851 the churches were also providing 74 denominational schools, supplemented by seven newly founded national (state) schools; this meant that in town about two-thirds of the eligible children were at school, compared with only about a quarter 10 years before. By 1850 there were said to be more than 1300 'educated persons' in the district, about 1000 of whom lived in Melbourne. Though what was meant by 'educated' is a little uncertain, it would cover, besides the professional and leading businessmen, the larger shopkeepers, manufacturers and skilled craftsmen (including a watchmaker and two makers of mathematical instruments). Reasonably well off after the depression, they would have had comfortable houses and two or three domestic servants, although like everyone else they suffered from poor medical knowledge, and dysentery and other children's diseases produced a high infant mortality rate. Lower down the social scale, the houses were smaller; many of the poor were still living in slab or bark huts, or even in tents if newly arrived, though the developing slums were certainly not as bad as those in London.
In the absence of mechanisation, manual labour was important. The work of the unskilled labourer was heavy and hours long, but the chronic labour shortage kept pay above subsistence levels. Trade societies were usually only friendly societies, but some brought together skilled craftsmen, like the carpenters, shoemakers and tailors, who were able to protect their working conditions despite the competition of labourers brought from Van Diemen's Land.
Poor living conditions provided greater problems than pay. Sanitation was bad, and streets were contaminated by animal refuse from livestock kept in town cowsheds, stable yards, fowl houses and even piggeries, by stagnant water and by other filth. Personally carting water was wearisome; lighting by candle or kerosene lamps was poor, amusements few, and drinking in the many rather unsavoury pubs (there was one for every 33 adult males) was all too often very heavy. Although consumption levels were lower than those of New South Wales and the United Kingdom, the clergy and others were as critical of the alleged passion for drink as of other types of misbehaviour.
Crime remained a problem. The police force, like that of Sydney and most English towns, was undermanned, ill paid and often drunken, corrupt or both - 'wholly insufficient for the protection of lives and property'. Both petty street crime and more serious larceny were even more common than in London, thanks largely to the number of ex-convicts in the community - probably about 5000 in 1850, including many of the 1727 'exiles' (Pentonvillians) who arrived between 1844 and 1849. All city-dwellers at the time, including the respectable classes, needed to be able to protect themselves and their families. Still, disorderly behaviour was hardly surprising in such a youthful community, lacking, as it did, the family ties that existed in Great Britain and Ireland. And being uninterested in the disputes over squatting and political separation that worried their wealthier neighbours, few of the poor caused political problems, except when they opposed convict exiles.
Homesickness and loneliness could cause distress, but by and large the so-called 'lower orders' were too busy to think much of such things. For women, domestic work, whether for one's own family or paid work for others, was heavy. Cooking on a wood stove was hot and tiring; washing was heavy; children were numerous and needed constant attention. Females - by 1850 almost equal in number to males - had few occupations other than domestic labour. However, all things considered, life in Melbourne was probably better than in London or other cities in the United Kingdom. A milder climate, better paid and more constant employment, easier access to the countryside, and sanitation better than at home, because its defects were on a smaller scale, all suggest that by 1850 the inhabitants of Melbourne were materially better off than those living in the cities of Great Britain. Overall they had benefited from their emigration and had created a thriving city, though they had ravaged an ancient community in the process.