Prior to the European settlement of Australia, the Ballarat region was populated by the Wathaurong people, an Indigenous Australian people. The Boro gundidj tribe's territory was based along the Yarrowee River.
The first Europeans to sight the area were an 1837 party of six mostly Scottish squatters from Geelong led by Somerville Learmonth who were in search of land less affected by the severe drought for their sheep to graze. The party scaled Mount Buninyong, among them were Somerville's brother Thomas Livingstone Learmonth, William Cross Yuille and Henry Anderson all three of which later claimed land in what is now Ballarat.
The Yuille family, Scottish settlers Archibald Buchanan Yuille and his brother William Cross Yuille arrived in 1837 and squatted a sheep run. The first houses were built near Woolshed Creek by William Yuille and Anderson (Sebastopol), while Yuille erected a hut Black Swamp (Lake Wendouree) in 1838. Outsiders originally knew of the settlement as Yuille's Station and Yuille's Swamp. Archibald Yuille named the area "Ballaarat" which it is thought he derived from local Wathaurong Aboriginal words for the area, balla arat. The meaning of this word is not certain, however several translations have been made and it is generally thought to mean 'resting place'. In some dialects, balla means "bent elbow" which is translated to mean reclining or resting and arat meaning "place".
The first publicised discovery of gold in the region was by Thomas Hiscock in 2 August 1851 in the Buninyong region to the south. The find brought other prospectors to the area and on 19 August 1851, John Dunlop and James Regan struck gold at Poverty Point with a few ounces. Within days of the announcement of Dunlop and Regan's find, a gold rush began, bringing thousands of prospectors to the Yarrowee valley which became known as the Ballarat diggings. Yields were particularly high with the first prospectors in the area extracting between half-an-ounce (which was more than the average wage of the time) and up to five ounces of alluvial gold per day. As news of the Australian gold rushes reached the world, Ballarat gained an international reputation as a particularly rich goldfield. As a result, a huge influx of immigrants occurred, including many from Ireland and China, gathering in a collection of prospecting shanty towns around the creeks and hills. In just a few months, numerous alluvial runs were established, several deep mining leads began, and the population had swelled to over 20,000 people.
The first Post Office opened on 1 November 1851. It was the first Victorian post office to open in a gold-mining settlement. Parts of the district were first surveyed by William Urquhart as early as October 1851. By 1852 his grid plan and wide streets for land sales in the new township of West Ballarat built upon a plateau of basalt contrasted markedly with the existing narrow unplanned streets, tents and gullies of the original East Ballarat settlement. The new town's main streets of the time were named in honour of police commissioners and gold commissioners of the time, with the main street, Sturt Street named after Evelyn Pitfield Shirley Sturt, Dana Street named after Henry Dana and Lydiard Street after his assistant, Doveton Street after Francis Crossman Doveton (Ballarat's first gold commissioner), Armstrong after David Armstrong and Mair Street after William Mair. These officials were based at the government encampment (after which nearby Camp Street was named,) which was strategically positioned on an escarpment with an optimal view over the district's diggings.
The first newspaper, The Banner, published on 11 September 1853, was one of many to be distributed during the gold-rush period. Print media played a large role in the early history of the settlement. Ballarat attracted a sizable number of miners from the Californian 1848 gold rush and some were known as Ballafornians.
Civil disobedience in Ballarat led to Australia's only armed civil uprising, the Eureka Rebellion (colloquially referred to as the Eureka Stockade) which took place in Ballarat on 3 December 1854. The event, in which 22 miners died, is considered to be a defining moment in Australian history.
The city earned the nickname "The Golden City" in the 1850s. The gold rush population peaked at almost 60,000, mostly male diggers, by 1858. However the early population was largely itinerant. As quickly as the alluvial deposits drew prospectors to Ballarat, the rate of gold extraction fluctuated and, as they were rapidly worked dry, many quickly moved to rush other fields as new findings were announced, particularly Mount Alexander in 1852, Fiery Creek in 1855, Ararat in 1857. By 1859, a smaller number of permanent settlers numbering around 23,000, many of whom had built personal wealth in gold, established a prosperous economy based around a shift to deep underground gold mining.
Confidence of the city's early citizens in the enduring future of their city is evident in the sheer scale of many of the early public buildings, generous public recreational spaces, and opulence of many of its commercial establishments and private housing. A local steam locomotive industry developed from 1854 with the Phoenix Foundry operating until 1906. The railway came to the town with the opening of the Geelong-Ballarat line in 1862, and Ballarat developed as a major railway town. As the city grew, the region's original indigenous inhabitants were quickly expelled to the fringe and, by 1867, few at all remained.
From the late 1860s to the early 20th century, Ballarat made a successful transition from a gold rush town to an industrial-age city. The ramshackle tents and timber buildings gradually made way for permanent buildings, many impressive structures of solid stone and brick mainly built from wealth generated by early mining.
Prince Alfred, Duke of Edinburgh visited between 9 and 13 December 1867 and, as the first royal visit, the occasion was met with great fanfare. The Prince Room was prepared at Craigs Royal Hotel for his stay. The city's first civic centre—Prince Alfred Hall—erected over the Yarrowee between the two municipalities, was named in his honour during his visit. The later attempt of the Prince's assassination by Ballaratian Henry James O'Farrell was met with shock and great horror from locals.
Ballarat was proclaimed a city in 1871. Gong Gong reservoir was built in 1877 to alleviate flooding and to provide a permanent water supply. A direct railway to Melbourne was completed in December 1889. Many industries and workshops had been established as a result of manufacturing and servicing for the deep lead mining industry.
Local boosterists at the start of the 20th century adopted the nickname "Athens of Australia", first used to describe the city by the prestigious Irish-Australian jurist and politician of the early 20th century Sir John Madden.
The first electricity supply was completed in 1901 by the Electric Supply Company of Victoria. A bluestone power station was built at the corner of Ripon Street and Wendouree Parade in 1901 with the main aim of providing the power required for electrification the city's tramway network.
Following the start of the 20th century, however, mining activity slowed and Ballarat's growth all but stopped—the city went into a period of decline.
The Sunshine rail disaster in 1908 resulted in the death of dozens of Ballarat residents. On 19 August 1909, a great storm lashed the city, resulting in the death of one person and injury of seven others. During the storm, a tornado swept across the city's northern and eastern suburbs destroying numerous homes in Ballarat North, Soldiers Hill, Black Hill and Ballarat East, lifting and then again touching down at Eureka where it destroyed more homes before dissipating.
Ballarat's significant representation during WWI resulted in heavy human loss. The city eventually lost first provincial status to Geelong. In response, local lobbyists continually pushed the Victorian government for decentralisation, the greatest success being the Victorian Railways opening the Ballarat North Workshops in April 1917. The Great Depression proved a further setback for Ballarat, with the closure of many institutions and causing the worst unemployment in the city's history, with over a thousand people in the dole queue.
The city's two municipalities, Ballarat East and West Town Councils finally amalgamated in 1921 to form the City of Ballarat.
While deep, the depression was also brief. The interwar period proved a period of recovery for Ballarat with a number of major infrastructure projects well underway including a new sewerage system. In 1930, Ballarat Airport was established. By 1931, Ballarat's economy and population was recovering strongly with further diversification of industry, although in 1936 Geelong displaced it as the state's second largest city. During World War II an expanded Ballarat airport was the base of the RAAF Wireless Air Gunners' School as well as the base for USAAF Liberator bomber squadrons. In 1942, Ballarat became connected to the state electricity grid by a 66,000 kV line. Prior to this, power supply was generated locally.
In the Post-war era, Ballarat's growth continued. In response to an acute housing shortage, significantly suburban expansion occurred. An extensive Housing Commission of Victoria estate was built on the former Ballarat Common (today known as Wendouree West). The estate was originally planned to contain over 750 prefabricated houses. While planning for the estate began in 1949, main construction occurred between 1951 to 1962. During the 1970s a further 300 houses were constructed. Private housing in the adjacent suburb of Wendouree closely matched and eventually eclipsed this by the mid-1960s. The suburb of greater Wendouree and Wendouree West had evolved as the suburban middle-class heart of the city.
The 1950s brought a new optimism to the city. On 17 April 1952 it was announced that Lake Wendouree was to be the venue for rowing events of the 1956 Summer Olympics, work soon began on an Olympic village in Gillies Street. A new prefabricted power terminal substation at Norman Street Ballarat North was constructed between 1951 and 1953 by the State Electricity Commission. The first Begonia Festival, a highly successful community celebration, was held in 1953. Elizabeth II visited on 8 March 1954. The Civic Centre, Prince Alfred Hall had burned down suspiciously that year, however a new Civic Hall was constructed and opened in March 1955. In 23 November 1956, the Olympic torch was carried through the city and the following day the rowing events were held at the lake. On 2 March 1958 the The Queen Mother visited Ballarat.
During the following decades, the city saw increased threats to its heritage. In 1964, the Ballarat City Council passed laws banning pillar supported verandahs in the CBD which threatened the removal of historic cast iron verandahs in the city. The by-law was met by staunch opposition from the National Trust who had begun campaigning to protect some of the city's most historic buildings. By the 1970s, Ballarat began to officially recognise its substantial heritage and the first heritage controls were recommended to ensure its preservation. With the opening of Sovereign Hill, the city made a rapid shift to become a major cultural tourist destination visited by thousands each year.
The city continued to grow at the national average throughout the late 20th century and early 21st century. In 2008 the City of Ballarat released a plan directing that growth of the city over the next 30 years is to be concentrated to the west of the city centre. The Ballarat West Growth Area Plan was approved by the city and state government in 2010, planning an extensive fringe development consisting of 14,000 new homes and up to 40,000 new residents including new activity centres and employment zones.
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