A great change came in the Province of Otago with the discovery of gold at Gabriel’s Gully in 1861. Thousands of miners flocked into Otago from the other provinces, from Australia, and the United States. Not only labourers but men in all grades of life hastened to the diggings, and business houses in Dunedin suddenly found themselves on the crest of a wave of prosperity.

In 1859, James Macandrew, in anticipation of taking a more prominent part in politics, sold his business to James Paterson and Co., and they were in a position to take better advantage of the boom.

October 21st, 1859.

We have now got fairly established in Macandrew’s premises, and got into something like working order. The first week our auctioneer sold upwards of £1,500 worth of goods. This week the sales have been smaller, but you will see that our next are of a larger description. Sales by auction are now almost of daily occurrence, and if well managed expect this branch of our business to turn out well. Our Mr. Walker is a very nice gentleman, and we think equal to the best in town. Our William is taking a general oversight of what is going out and coming in complains of being so hard wrought that he will be grey-headed in a month. George Sinclair and another man act as porters, and a Mr. Lockhart as principal clerk. With all we have plenty to do. The old store is still kept going as a retail store under the care of a Mr. Knox from Edinburgh.

Since William came into town he has taken in a partner with his run—a gentleman of means, who has as an equivalent to his share put on the run 750 ewes value £1,000. He also puts on 1,000 more ewes on terms. The one half of the profits of all is William’s. After paying expenses very shortly it will yield him £500 a year. Am sure you will say he has been a lucky fellow. The other run which we applied for is now under offer to another party by us for a few hundreds, although we have never seen the country.

Letters of January, 1860, show how George Hepburn advanced in political life, and was re-elected to the Provincial Council.

January 26th, 1860.

The contract was signed yesterday for the new Athenaeum for £6,500, and plenty other work always springing up. In your letter you say you are sorry we did not send you an order. Indeed, we don’t know what to send for, there is now such an abundance of everything that we are with many articles inundated. The neighbouring provinces, hearing of our prosperity, are sending goods by the shipload to be sold even by auction. You will see by our advertisements that this is the case. The Cheviot from Glasgow with Mr. Holmes completely overstocked this market, especially with oatmeal, 500 barrels.

By the by, you will see from our papers that we have had a general election throughout the Province. Mr. Macandrew is on for Superintendent, and your humble servant is again returned to his old seat for the Western District. It was again contested for by a poll, but the old three members all got in. I had to meet with my constituents at two different places, stand up and make a speech about my views of parliamenting, then stand an examination for nearly an hour by every Jack and Tom. However, I came off with great eclat, having given general satisfaction. Having now a very full intercourse with His Honour, a good word could be easily put in for a friend for a good job (not to be repeated).

Difficulties of exchange and the sudden expansion of business are topics of letters of the early ‘sixties.

March 31st, 1860.

Wish we had had another £100 bill to send you. Will try and get something by next mail. By this one we are sending bills to Messrs. Lockhart, Douglas, and Edmondston, and at the same time never saw money so tight as at the present. The banker has pulled the strings tightly with everyone. We have upwards of £600 of paper in his hands undiscounted. Besides we have taken up above £800 worth of Monson Bros.’ paper. No wonder then we are scarce at present. The harvest is just nearly over, and for the last month or six weeks trade has been very flat, as is always the case during harvest. The crops are very good all over the province, except the potatoes. They are very light from the extra dryness of the season. The farmers are also very hard up for money because there are no demands for grain for shipment.

There is a very large quantity of oats grown this year, but no sale. Wheat, however, is worth 7s. to 8s. per bushel.

Other provinces in New Zealand seem to be much worse off in business than we are. Indeed, we are evidently the most prosperous of all the islands. The proof is that they (especially Wellington) are shipping goods to us for sale by auction at what they will bring, destroying our prices.

Our newspapers show a good front of advertisements now and must pay well. The proprietor of the "Colonist" [W. Lambert founded the Otago Colonist in 1856 and carried it on until 1862.] is building a splendid dwelling house, about the best in the province. He came here below par I believe.

The new courthouses are now nearly finished; as also the new church and manse for Mr. Stuart—all excellent buildings. Mr. Kilgour, late Ross and Kilgour, is building a large new store, two storeys, all stone, and it will cost £1,000. The Athenaeum is not begun yet, but is contracted for—cost £6,000.

October 1st, 1860.

The news of so many ships and people coming here is causing shippers to send out so much. During the last month you will see from the papers we have had great additions to our numbers in the arrival of the Pladda, the Robert Henderson, Henrietta, Bruce, and William Mills, besides The Evening Star is daily expected. Notwithstanding all these people arriving, they are picked up very shortly and vanish away from town without knowing very much difference. However, the mouths are all to feed, and the consumption must greatly increase. Steedman from Loch Gelly has arrived, all well, and handed me your note. A number of deaths were on board the Henrietta, and I may add a great many in Dunedin during last winter, far more than ever we saw before in one season.

For the last ten days I have occupied my seat in the Provincial Council (just brought to a close this day. The early part of the proceedings which you will see from the newspapers now sent has been of a painful nature, insomuch as it has involved the character and reputation of the highest officials in our Province. Amongst other items brought up you will perceive our name coupled with that for the railway plant, not that we are implicated in the slightest degree but that the auditors could find no trace of said sum having been remitted to the home agents, and our last letters from home proved that. However, he assures us in a note that the money was sent in August last (next mail will prove that also). Be that as it may, we hold the Government bound for his intermittencies, and will stick to the material until paid for. Further than this we are in no wise involved. Only just now we have had to meet a heavy sum, being part payment of our purchase of his business premises, which sum he was bound to take up the acceptance being granted to meet his own pressing necessities, but he appears to have no means of doing. We will now make arrangements to meet these payments from other resources other than our business, but it has put us about in the meantime. The whole affair is very sad; still he maintains his innocency and that time will clear everything up.

Perhaps the news you get about the war with the natives in the North Island may give you some anxiety, but to us here it gives little or no concern, and hear as little about it as you do. We think it is made more of in the home papers than even here. We regret deeply, however, that such should be the case. It has been very hard for the poor settlers of Taranaki; hope it will soon be put an end to. We see from the great number coming with the Lady Egidia that the folks at home are not afraid to come to Otago yet. Our population has greatly increased during the last year, and everything is going on with good spirit. The Council has just passed another Appropriation Bill for £126,000.

Having entered upon another new year, we paid you the compliments of the season. We spent a very happy New Year’s Day, all our family being together. The young folks, with some acquaintances, forming a party of 13, set all off for a ride to the Taieri Plain. I accompanied them for 12 miles, where George and I called upon an old friend and had lunch and returned. The party went on to the river, about five miles further. After resting and enjoying themselves for a while, they all returned in safety for tea, then had a dance in the barn, and parted good friends.

September 7th, 1861.

You cannot fail to see from our papers sent up to date the extraordinary excitement here in consequence of the Goldfields. [Mr. W. Pember Reeves writes: "The good Presbyterians of Dunedin hardly knew in what spirit to receive the tidings. But some of them did not hesitate to test the field. Very soberly, almost in sad solemnity, they set to work there, and the results solved all doubts. Half Dunedin rushed to Tuapeka. At one of the country kirks the congregation was reduced to the minister and precentor. Before many months the Province’s population had doubled, and the prayerful and painful era of caution was swept away in an era of Victorian enterprise."—The Long White Cloud, p. 228.] The arrival of vessels daily, all crowded with passengers, and the number advertised just ready for sailing from Melbourne is very great, so we will soon be lost in the multitude. What the result will be time will tell. You will also see the astonishing amount of gold that is coming in from the field, but the papers will give you a fuller account than I can possibly do in a short letter. None of our family has gone yet. However, James has sent over his dray from the farm (the men having all left him) and put it on the road to the Diggings. The first load from town was at a £100 per ton. Now he is at the Waihola Lake, about half the distance from town, at about half that price. He pays his driver £5 per week and his keep. Jessie and David are the only keepers at Brooklands at present, George being still with us at Wakari. He is still much the same, going about, but unable to go to the farm until better weather sets in. The price of every sort of labour about the town is nearly double. Lighterage, 20s. per ton instead of 10s. ; carting, double; beef, 10d. to 1s. per pound. We have started a horse and cart at the jetty for our own goods and for hire. William has taken out a license as auctioneer. You will see he has a good lot to start with on Tuesday first. We have parted with our old auctioneer, Walker; he did us no good.

Monday, 9th.—The Pladda has arrived yesterday, all well, with her numerous living cargo. Also the Arabia and Ocean Queen, from Melbourne, containing about 700 more. That is upwards of 1,000 persons since Saturday. Last night, Sabbath, about 300 were brought to the jetty by a steamer from the Port, breaking very much the usual quiet of our Sabbath eve in Dunedin. Alas now for quiet Sabbaths. Next Sabbath is our quarterly communion in Knox Church. Rev. Mr. Stuart has just returned from the Gold-fields, where he has been preaching for two Sabbaths to the multitudes among the hills and gulleys. He was much pleased with his journey.

George Hepburn was elected M.H.R. for Roslyn in 1866, retiring in 1868 from health reasons. His interests appear to have centred more in provincial than in colonial affairs.

February 13th, 1865.

About a week ago we got a servant in the person of Mary Cable from Westertown ex Paria, but only to be for a month or so. The fact is that servants are worse to be had now than ever, and are getting higher wages—£30 being almost the lowest price for a common servant, professional much higher. The two we had previously, only one month each, were not worth their salt, yet got at £30.

Uncle Jas. Paterson is still at Wellington and is in the Ministry, a much better billet than the Mayorship. [The Hon. James Paterson was defeated by a small majority by W. Mason in the first election for the Mayoralty of Dunedin in July, 1865.] Mrs. Paterson is here also at present, but we expect them down by March 1st, there being a General Election coming off next month, and he must look after his "seat " for the city. Your Uncle George is also in the field for Roslyn District, but is to be opposed by Captain Borton, and as all my family are against my going I am thinking to withdraw.

October 19th, 1866.