Sir Charles Fitzroy and Deas Thomson were initially sceptical about Hargraves. In late May, Fitzroy wrote that he did not think it was: ‘advisable to increase the very great excitement which is engrossing and unhinging the minds of all classes of the community…without obtaining further confirmation of its extent and value,’ though he added, ‘a proclamation has been prepared…asserting those rights and making known the steps which the Government will be prepared to take with reference to the granting of licences’ for diggers’.  Gold licences enabled the government to assert the rights of the Crown (under law all minerals belonged to the Crown) to tax the miners and attempt to control the number of people flocking to the goldfields. The proclamation was issued on 22 May, and was followed by provisional regulations  under which licences could be obtained on 11 June. 
Lambing Flat miners’ camp, c1859
Crown Land had been occupied under licence since the 1820s. An Office of Commissioner for Crown Land was set up in 1833 and Squatting Acts in 1836 and 1838 permitted Commissioners to licence occupiers of Crown Land. This legislation provided a sound framework to deal with gold discoveries and the issuing of gold licences legitimised the occupation of Crown Lands though unlike the squatting system no pre-emptive purchase rights were introduced. The licence system in NSW also built upon experience in California that Thomson understood to be working in practice. Both Fitzroy and Thomson recognised that gold licences would not bring in large government revenue but believed that since the advantages of gold would be shared by all in the colony, this would stimulate economic growth. Their aim was to cover the expenses of the gold establishment and maintain law and order on the goldfields not to generate surplus revenue.
When the gold rushes began, restrictions on self-government in NSW  meant that the partly elected Legislative Council was not involved in making policy for the goldfields.  Land policy was part of the Crown’s responsibility and initially the Executive Council appointed new officials and issued gold regulations. Although this did not initially cause tensions between the two councils, the Legislative Council increasingly resented the increased Crown revenue and patronage, and in late 1851 it rejected the government’s financial estimates to meet the rising cost of policing from the colony’s general revenue.  In June 1852, the British Government surrendered control of gold revenue, and the right to administer the goldfields to the local legislature. This was translated into legislation as the Goldfields Act in December 1852 although opposition among the diggers led to the regulations being amended the following year.
From the outset, the government’s management of the fields was ‘orderly’. They were not placed under the control of the Chief Commissioner of Crown Lands but a new Commissioner was appointed with specific responsibility for goldfields in the settled districts, but no separate administrative structure was provided. Thomson realised that the regulations would win acceptance if they were tactfully applied and his appointment of John Richard Hardy, police magistrate at Parramatta, as gold commissioner proved crucial. Hardy, who is said to have introduced round-arm bowling to NSW, carried out his duties efficiently and sympathetically quickly marking out claims, issuing licences to dig and settling disputes. For example, he allowed diggers to try their luck for a few days to earn their first licence fee something later disallowed. In addition, the Reverend William Clarke had already mapped possible gold-bearing areas publishing his Plain Statements and Practical Hints Respecting the Discovery and Working of Gold in Australia in 1851, and newly arrived miners could be directed to suitable unallocated claims. Unlike Victoria, most of the miners came from within NSW and many returned home to resume their ordinary occupations when rain flooded the valley. By the time news of gold had spread abroad, Victoria’s more profitable rushes had begun and became the focus for gold seekers. By November 1851, the Gold Commissioner had an office in Sydney and eight district commissioners in the field with their assistants and clerks. A year later, however, Deas Thomson agreed with the Legislative Council’s proposal to abolish the office and from then on the administration of the gold establishment was under the control of the Colonial Secretary.
A few weeks after the licensing system was introduced, several groups approached the government with proposals for larger-scale mining on a royalty basis, as was common practice in Britain. Fitzroy recognised that more complex regulations were needed if the fields were rich enough to support a permanent mining industry. The licensing scheme applied to alluvial mining (essentially panning for gold in rivers and streams) but detailed regulations for draining ponds and mining quartz (that was crushed to extract the gold) were worked out between July and September 1851 with waterholes worked on a licence basis and quartz mining based on royalties of 10%. In November 1851, revised regulations allowed companies to mine a quarter of a mile either side of the vein and this often took in alluvial areas where independent diggers worked. Discussions by the Executive Council and then the Legislative Council resulted in the Goldfields Act 1852 that permitted licences or royalty payments for large-scale alluvial mining if machinery was used. Licences and royalties were reduced the following year but by mid-1853 most of the larger mining companies had collapsed or abandoned their claims because of the high cost of working alluvial sites and the absence of promising quartz locations. The various government regulations to control companies between 1851 and 1853 do not appear to have stimulated significant growth in large-scale mining, and may have inhibited it.
Angus Flat Gold Mining Company, Forest Creek, Victoria
The approach that colonial government took to licensing, at least initially, was ambivalent and, perhaps as a result, there was less opposition than in Victoria. The first regulations made no mention of penalties and the more comprehensive regulations of 7 October 1851 established a double licence-fee for those caught evading the rules but did lay down procedures for enforcement. Despite widespread criticism from the Sydney Morning Herald and from members of the Legislative Council in 1851 and 1852, the government appeared willing to accept an element of licence evasion until the Goldfields Act of December 1852 clarified the situation by specifying fines and the destruction of mining equipment for those unlicensed diggers. The lack of clear guidance until late 1852 led to arbitrary conduct with commissioners destroying some diggers’ equipment and dragging unlicensed miners off to gaol resulting in unfavourable comments in both the Empire and the Bathurst Free Press.  The extent of this harassment is unclear and commissioners often ignored unsuccessful unlicensed diggers during the winter of 1852 that had been disastrous because a long wet season had frequently halted digging. Neither the Sofala protest meeting  on 17 November 1851 nor the petition of the Turon River miners of 8 February 1853, in the immediate aftermath of the new regulations mentioned the behaviour of the commissioners though they were critical of the system.  Enforcement of the new regulations was not heavy-handed and potentially difficult situations were defused by the tactful attitude of the gold commissioners.
The approach in NSW to both licensing and royalties did not represent a radical departure from existing practice. In fact, the government was slow to develop a systematic approach to enforcement of licences and generally the diggers did not believe they were victims of an oppressive and arbitrary system. In February 1852, after major disturbances had taken place in Victoria, the Sydney Morning Herald, always eager to pour scorn on the sister colony, contrasted the sluggishness and indecision of the Melbourne authorities with ‘the successful example of our own government’.  By contrast, larger-scale mining was subject to more effectively enforced regulation though it took the colonial government over a year to recognise that there was a clash of economic interests on the fields especially over alluvial mining. 
The Colonial Secretary was responsible for all matters relating to mining before 1856. From 1856 until 1874, the administration of mining in NSW was carried out by the Under Secretary for Lands, with local management of the gold fields undertaken by Gold Commissioners assisted from 1866 by mining registrars. As a result of increased mining activity and general dissatisfaction with the administration of mining by the Department of Lands, the Mines Department was established on 1 May 1874 under the provisions of the Mining Act (37 Vic No13). The Act also created a new system of mining districts and authorised the appointment of mining wardens. The Prospecting Board was established on 12 July 1887. The Board was authorised to inspect sites proposed for prospecting by miners and estimate the cost of any work required, with the sum not exceeding 50% of the estimated costs to be provided. It provided funds appropriated out of public revenue and referred to as the Prospecting Vote. The funds were used to promote prospecting for gold and other minerals, to encourage the opening of new fields and to test the mineral deposits in the State, with assistance allotted to prospectors for approved work on sites holding a mining title.
 See, Fitzroy to Earl Grey, 22 May 1851, ‘Correspondence relative to the Recent Discovery of Gold in Australia’, Parliamentary Papers, Vol. xxxiv, 1852, 1425, p. 1. As late as 31 May, Fitzroy’s despatch included a saving clause that the discovery might yet prove to be an illusion.
 Fitzroy set a high licence-fee of 30 shillings per month for the right to mine a 12 foot square claim. The 1851 regulations are printed in Clark Select Documents 2, pp. 8-9.
 See, Fitzroy to Earl Grey, 11 June 1851, ‘Correspondence relative to the Recent Discovery of Gold in Australia’, Parliamentary Papers, Vol. xxxiv, 1852, 1430, p. 17.
 The idea of high fees to discourage miners originated in California where they were levied on foreign miners: Hittell, Theodore H., History of California, Vol. 3, (N. J. Stone), 1898, pp. 262-265 and Ellison, J., ‘Mineral Land Question in California 1848-1866’, Southwestern Historical Quarterly, Vol. 30, (1), (1926), pp. 34-56. Franklin, William E., ‘Governors, Miners and Institutions: The Political Legacy of Mining Frontiers in California and Victoria, Australia’, California History, Vol. 65, (1), (1986), pp. 52-57.
 Kingston, Beverley, A History of New South Wales, (Cambridge University Press), 2006, pp. 51-55, provides a short overview of developments in the 1850s.
 For what follows see Irving, T. H., and Liston, Carol, ‘State intervention and equality in the New South Wales goldfields 1851-1853’, in Eddy, J. J., and. Nethercote, J. R., (eds.), From Colony to Coloniser: Studies in Australian Administrative History, (Hale & Iremonger), 1987, pp. 103-119.
 This was rejected by a substantial 25 to 11 on 29 October 1851.
 Empire, 16, 23 October, 7 November and 12 December 1851, Bathurst Free Press, 24 July 1852.
 The diggers petitioned the legislature complaining that the licence system was a tax on labour rather than produce and were therefore unjust in principle. Early in 1852, a group of 400 miners on the Turon organised armed resistance to the regulations but the government averted an uprising by sending half a company of soldiers to the disturbance.
 Higgins, M., Gold and water: A history of Sofala and the Turon goldfields, (Robstar), 1990, is the best study of this field but see also ibid, Irving, Terry, The Southern Tree of Liberty, pp. 228-233.
 Higgins, M., ‘Near-Rebellion on the Turon Goldfields in 1853’, Journal of the Royal Australian Historical Society, Vol. 68, (1983), pp. 292-311 takes a contrary view.
 Sydney Herald, 25 February 1852.
 See, Birrell, Ralph, ‘Eureka and the redefinition of company mining in Australia’, in ibid, Mayne, Alan, (ed.), Eureka: Reappraising an Australian Legend, pp. 175-200.
 See, Votes and Proceedings 1887, Second Session, Vol. 4, Prospecting for Gold and Other Minerals (Regulations for Distribution of Vote For), printed 12 July 1887, p.509.
 Parliamentary Papers 1929-30, Vol. 3, Annual Report of the Department of Mines for the year 1929, p.207