Between 1809 and the Colonial Office’s change of policy in 1817, Macquarie based his land policy largely on free settler immigration and launched a comprehensive policy of settlement in the ‘interior’ rather than on the more dangerous flood plains. Military officers were no longer to receive grants and he vigorously opposed monopolists especially rich settlers such as the Blaxlands who, he argued, having turned their attention to cattle production, had violated their implicit contracts with the government in taking grants to advance arable farming. Macquarie never grasped the potential for pastoral farming but his conclusions were probably right; the rich settlers became increasingly difficult to manage and ‘it seemed as if a military oligarchy were being reincarnated in the form of a civil monopoly’. He concluded that if gentlemen settlers were ‘difficult’ and free settlers still arriving in only small numbers then emancipists should be encouraged to farm land. In 1816, for example, of the 352 people who settled land, only 15 were free immigrants. It was important to keep out poor settlers, who would become a burden on the colony’s resources and land speculators. In 1812, Macquarie included clauses in every grant forbidding their sale for five years and that the land would be cultivated. Supported by Bathurst at the Colonial Office, Macquarie had developed an effective system of land settlement based on nothing more than ‘a Grant of Land and Some assistance of Convict Labour’.
The new system introduced in 1817 had two key features. First, the amount of land granted was to be determined the actual amount of capital possessed by a settler. Secondly, it sought to resolve the question of freeing the market. In 1816, Treasury officials recommended public competition and Bathurst even threatened to import Indian maize if it was cheaper. Macquarie, however, postponed the new system and continued with the old method of government purchase. There were to be no foreign markets leading to a petition in late 1819 by settlers who rightly claimed that ‘the surplus becomes useless for want of a Market’. While Macquarie had embraced the need to expand the settlement of land and had evolved effective strategies to do so, he was far less willing to welcome a free market solution. Increasingly, his land policy was under critical scrutiny. Large farmers opposed the governor because of his failure to open up the market and the graziers joined them because he had neglected their protest against English duties. The Colonial Office was concerned by ever-increasing spending without real returns, a situation increasingly unacceptable in Britain where retrenchment after the French Wars was the dominant economic priority. In addition, Macquarie had been circumspect in his despatches with regard to land policy and for over nine years had not forwarded returns of land grants to London.
The result was the appointment of Bigge as a Commissioner of Inquiry to fill in the details that Macquarie had omitted from his despatches. Bigge arrived in NSW with certain prejudices: he was less than sympathetic to those who had been transported to the colony but leaned towards the interests and values of the large landowners. His analysis of the weaknesses of Macquarie’s land policy was forensic in nature though his constructive proposals were far from original. Bigge found that many of the criticisms of Macquarie’s land policy were justified. Of the 324,251 acres of land granted, convicts held more than a quarter and thousands of blocks of land were held without title. While Macquarie may have granted large tracts of land, settlers preceded surveyors who had little incentive to keep up with the rate of occupation since their profit was barely 2/6 per farm. Even where farms had been surveyed, there was a long delay in completing the deeds because registration barely covered the cost of the parchment. At every level of land policy, there were clear abuses.
Bigge proposed reviving the antiquated system of public farming in the new convict settlements of the north and the establishment of a distillery to use the surplus grain, something that had originally been proposed over a decade earlier. Instead of opening up an export trade, he relied on the building of more granaries and the conversion of the wheat into the arrack of the time. In granting land, he repeated Bathurst’s 1817 programme by recommending that land should be allocated in proportion to capital alone. There was little new in Bigge’s recommendations but they clarified the issues and justified Bathurst’s policy while condemning Macquarie’s administration of that policy.
Macquarie’s belief that emancipists could form the backbone of colonial society was bankrupt by 1820. This was reflected in his arbitrary treatment of settlers in his final years as governor, his refusal to allow any ex-soldiers to settle in 1820 and his notice, in March 1821, banning applications for land. The future that Macquarie did not recognise lay with the small free immigrant and with pastoral farming. Yet, during his governorship, he raised to NSW from a penal colony to a civil society in which there was a large free community thriving on the produce of flocks and the labour of convicts. Between 1810 and 1821, the population of NSW rose from 12,000 to nearly 40,000 cultivating 32,000 acres of land. The problem was that Macquarie’s strengths in 1810 had become his weakness by 1820: ‘a war-trained governor, who subjected lawyers and capitalists to his will, was admittedly suited to a convict settlement, but not for an expanding free colony’.
The first official notion of land settlement was contained in Governor Phillip’s official instructions, in which it was assumed that a self-sustaining rural economy would make its own demand for land. Initially, settlement was linked to the feeding of the population. Grants would be made available for those who applied and small portions would be offered to emancipated convicts as it was believed that rural labour could help redeem fallen characters. The land grant system, under the direct authority of governors, was maintained until the 1820s and formed the only official means of broadening the base of settlement. Initially natural geographical features, such as the Blue Mountains, prevented the westward expansion of NSW and new settlements were made for strategic reasons by Lieutenant Collins at Port Phillip and VDL. Although Collins discounted the country at Port Phillip, VDL was settled and land grants were made at the governor’s discretion.
Under Macquarie the system of grants reached its height. He held the view that rural areas should have towns constructed as service centres and places of government. Moreover, he believed that yeomen farmers should become the backbone of society and policy should be framed for their benefit. Few admitted that the Australian environment was more suited to grazing than intensive English agriculture. Large landowners and wool growers such as John Macarthur, Samuel Marsden and Gregory Blaxland sought to expand the territory available and it was the manoeuvring of private individuals that opened a path to new land in the west beyond the Blue Mountains. The investigations and report of Commissioner J.T. Bigge laid the foundations for altering the way in which land settlement progressed. Bigge, like Macquarie, supported the role of small farmers, but saw that wool could provide valuable export earnings encouraging a new type of settlers prepared to buy land from the Crown that gave them a permanent stake in the country.
Land policy between 1788 and 1821 was based on the granting of land by NSW governors to individuals. It was part of a controlled economy in which the colonial government was the purchaser of produce in which the market forces of supply and demand generally did not operate. While this may have been justifiable in the immediate aftermath of the establishment of a penal colony where survival and basic subsistence were key priorities and where government was by military rule, it was not conducive to territorial or economic expansion. Macquarie may have laid the foundations for both between 1809 and 1821 but there were important limitations to his policies. It is no coincidence that the emergence of a new approach to land policies emerged in the 1820s at the same time that NSW moved from military to civilian rule and gubernatorial autocracy was replaced by limited representative institutions
 Ibid, Roberts, Stephen, History of Australian Land Settlement 1788-1920, p. 21.
 This had the effect of reducing speculation in land in contrast to the speculative drive behind farming in Upper Canada.
 Bathurst to Macquarie, 24 July 1816, HRA, Vol. 9, p. 151 and Macquarie to Bathurst, 31 March 1817 outline Macquarie’s change in policy.
 HRA, Vol. 10, p. 59.
 Bigge’s Reports were printed in three volumes. Vol. 2: The State of Agriculture and Trade in the Colony of New South Wales, The House of Lords, (Paper 119), printed, 4 July, 1823, facs ed., Adelaide, 1971 contains his recommendations on farming.
 Ibid, Roberts, Stephen, History of Australian Land Settlement 1788-1920, p. 25.
 Wheat, barley and oats have been produced in VDL since the early days of European settlement. After starvation conditions in 1805-1807, some was exported by 1812 and in substantial quantities by the 1820s when VDL was regarded as the granary of NSW.