#1. Effects of Gold Discovery.#--For some years after 1851 the colony of New South Wales passed through a severe ordeal. The separation of Port Phillip had reduced her population by one-fourth and decreased her wealth by fully a third; the discoveries of gold at Ballarat and Bendigo had deprived her of many of her most desirable colonists. But the resources of the colony were too vast to allow of more than a merely temporary check, and, after a year or two, her progress was steady and marked. The gloomy anticipations with which the gold discoveries had been regarded by the squatters and employers of labour were by no means realised; for though men were for a time scarce, and wages exceedingly high, yet, when the real nature of a gold-digger's life and the meagreness of the average earnings became apparent, the great majority of the miners returned to their ordinary employments and the colony resumed its former career of steady progress, though with this difference, that the population was greater, and business consequently brisker than it had ever been before. Fortune, however, had given to Victoria so great an impetus in 1851, that the firm prosperity of New South Wales was completely lost sight of in the brilliant success of its younger neighbour. The yield of gold in New South Wales was never great as compared with that of Victoria; for, with the exception of 1852, no year produced more than two million pounds worth. But the older colony learnt more and more to utilise its immense area in the growth of wool, an industry which yielded greater and more permanent wealth than has ever been gained from gold mining. #2. Governor Denison.#--Governor Fitzroy, who had been appointed in 1847, remained eight years in office, and thus was present during the events which made so great a change in the prospects of the colonies. In 1855 he returned to England, and his place was taken by Sir William Denison, who had previously been Governor of Tasmania. In 1854 great excitement had been caused in Sydney by the outbreak of the Crimean War, and the people, in their fear lest they might suddenly receive an unwelcome visit from Russian cruisers, hastened to complete a system of fortifications for the harbour. The new Governor, who had in youth been trained as an officer of the Royal Engineers in England, took a warm interest in the operations. He built a small fortress on an islet in the middle of the harbour, and placed batteries of guns at suitable spots along the shores. The advance of the science of warfare in recent times has left these little fortifications but sorry defences against modern ironclads; but they have since been replaced by some of those improvements in defence which have accompanied the invention of new methods of attack.