Although very small amounts of gold had been discovered in Port Phillip Bay region in 1847, and 1,000 grams of gold by a small boy named Chapman on Glenmona Station 160 km north east of Melbourne - nothing significant to that date had been discovered. In 1851, therefore, the Victorian Government offered a reward for gold found in Victoria, to attract settlers and stimulate the economy. The government was worried that all the able-bodied workers were leaving Victoria for the New South Wales goldfields. Businessmen put pressure on the government and formed a Gold Discovery Committee which put up a reward of 200 pounds for anybody finding payable gold within 320 km of Melbourne.
James William Esmond then found gold at Clunes, north of Ballarat, on 29 June 1851, which was more substantial than earlier finds. Esmond started a goldrush with another miner, W. Campbell, finding gold in the Clunes area soon after, and other diggers finding gold in the Buninyong ranges near Ballarat. Other finds were made in the Bendigo area, and before long gold was discovered at Warrandyte; by the end of 1851 Esmond had started the Victorian gold rush and more people were flocking to the Victorian fields than anywhere else. The government's ploy had succeeded.
As the government had feared, the gold rushes had a big impact on the economic and social life in the cities and towns, as able-bodied men deserted their jobs and homes for the diggings, often leaving their families behind to cope for themselves - such was the lure of gold.
The Bathurst Free Press of 17 May 1851 reported this dislocation, "the discovery of gold by Mr Hargraves has produced tremendous excitement in the town of Bathurst and surrounding districts. For several days after our last publication, the business of the town has been utterly paralysed. A complete mental madness seems to have seized almost every member of the community - and as a natural consequence, there has been a universal rush to the diggings."
People of all trades, callings and pursuits were quickly transformed into miners, and many a hand which had been trained to kid gloves, or accustomed to wield nothing heavier than a pen, was employed to clutch the pick and crowbar, or rock the cradle at the infant mines. The town blacksmiths could not turn out the picks fast enough. The roads to the diggings became alive, with hopeful miners from every quarter, some armed with picks, others shouldering crowbars or shovels with washbasins, tin pots and swags swung over their shoulders.
The government's fear had proven correct. Life would never be the same again for ordinary people anxious to get rich quick.
The Governor of Victoria, Charles La Trobe, even complained to the British authorities "within the last few weeks the towns of Melbourne and Geelong and their large suburbs have been emptied of many classes of their male inhabitants. The streets which were crowded with people loading drays for the diggings for a week or ten days are now deserted".
"Not only have the idlers and day labourers, shopmen, artisans and mechanics of every description thrown up their employment, and in most cases left their employers and their wives and families to take care of themselves and run off to the diggings - but also responsible tradesmen, farmers, clerks of every grade and even a few of the superior classes have followed".
It was like a revolution, and the biggest change in the old convict colony since its formation.
In 1851, Victoria's Governor La Trobe reported widespread desertions following the gold rushes, saying in his report back to the British authorities, "cottages are now deserted, houses are all to let, business is at a standstill and even schools are closed. In some of the Melbourne suburbs not a man is left and the women are grouping together for protection to keep house."
The ships in the harbour were deserted and did not have crews to sail, let alone load or unload goods. All building works and contracted works, government and private, without exception, came to a standstill. Supplies were running short and the price of provisions was rising alarmingly.
Suddenly, cities like Melbourne were desperately short of people to continue basic services, and the city would suffer for months before diggers returned, disillusioned from the goldfields to resume their normal occupations.