In 1802 Port Phillip Bay was discovered by John Murray
and Matthew Flinders. They reported their discovery to the British government
but colonists were not sent there right away. 
It
was not until John Bateman signed a treaty
in 1835 did the first settlements begin in this area. He signed a treaty
with aborigines. He gave them 40 blankets, 30 axes, 100 knives, 50 scissors,
30 mirrors, 200 handkerchiefs, 100 pounds of flour and six shirts in exchange
for 500,000 acres. This exchage was similar to Peter Menhuit's accusition
of Manhattan.
A few months later John Fawkner settled on the Banks of the Yarra River and started the first settlement in the area. In 1837 the original street grid pattern was designed by Robert Hoddle. Melbourne was built one mile along the Yarra River (east to west) and three-quarters of a mile north to south. Melbourne was named after the Prime Minister Lord Melbourne of Britain in 1837 too.
In 1850 gold was struck
in Ballarat. This rural community was north west of Melbourne. The great
gold rush began and Melbourne began to grow. By 1860 the population was
125,000 people. This was an increase of 15.7% from 1850.
In 1851 Victoria split from New South Wales because they wanted to be on their own and the new found gold gave them economic confidence. Melbourne became the center of government for Victoria. By 1860 Melbourne was the largest city in Melbourne.
Manufacturing also began to flourish but by the 1890's Melbourne's economy fell. Banks closed, businesses went bankrupt and unemployment soared because gold mining declined, there was too much much British investment in Melbourne and there were too many disreputable land speculators. Still by the end of the century Melbourne had a bigger population (close to half a million people) and a political control over Sydney. Melbourne gained the name "Marvelous Melbourne."
Collins Street at the turn of the century. This was an
elegant boulevard where the commercial center was located.
In 1901 Britain gave up Australia as a colony and Australia formed a federation. Melbourne was the capital of the Australian Federation. The formation of the Australian Federation was good because it increased their international market. In 1927 the capital was moved to Canberra, which is located in New South Wales. Canberra is a planned capital and is similar to Washington, D.C. in this respect.
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