On January 12, 1852, Lieutenant-Governor Latrobe wrote:  “The police in town and country have almost entirely abandoned duty,” and he begged of the Secretary of State to send military aid.  In May, 1852, Sir John Pakington replied, promising six companies of the Fifty-ninth Regiment from China, but subsequently decided to send a whole regiment direct from England.  A man-of-war was also to be stationed in Australian waters.  A still more welcome assistance came in the early part of the year from the Governor of Tasmania, who sent, at Latrobe’s earnest request, a body of two hundred pensioners, who had been serving as convict guards, and who might be expected to resist those temptations which, if yielded to, would result in the loss of their pensions.  But all this assistance meant money, and the Government soon fell into sore straits.

It is true that at first the revenue rose substantially.  Comparing the income for the quarters ending December 31, 1850, and December 31, 1851, respectively, we find, on general account, an increase of eleven thousand pounds, or about 30 per cent., and, on the Territorial account, or Land Fund, an increase of seventy-three thousand pounds, about 100 per cent.  Three months later the increase was about 200 per cent. on the general revenue, while the Territorial revenue was about the same.  But the latter fact may be accounted for by the transferrence of the fees for gold licenses to the general revenue.  It is more important, however, to notice that, though the revenue was rising, expenses were increasing still faster.  Not only had the staff to be doubled, or trebled, at a very large increase of pay, but government contracts for public buildings, printing, stores, fittings, and other necessaries could be placed, if at all, only at extravagantly high prices.  “No tenders can be obtained for supplies of boots and shoes; orders have been sent to neighboring colonies for them.  Old furniture sells at about 75 per cent. advance on the former prices of new; scarcely any mechanics will work.”  Latrobe estimated the deficit in the revenue of the year 1853 as nearly four hundred thousand pounds, notwithstanding that he reckoned the whole gold revenue of six hundred thousand pounds as available for general expenses.

In his anxiety the Lieutenant-Governor had at first (December, 1851) proposed to double the license fee of thirty shillings a month; but the proposal had provoked such a storm of opposition that he withdrew it.  The revenue from licenses was the source of much contention.  The Government alleged that it was not taxation, but rent, of Crown lands, and at first devoted it exclusively to the service of the gold-fields.  The diggers denounced it as taxation without representation; and the Legislative Council, almost necessarily in opposition to the Government while the latter was administered by nominees of the Colonial Office, refused to make up deficiencies out of the general revenue.  Thus the Lieutenant-Governor was placed between two fires.  If he enforced the license fees he angered what was rapidly becoming the largest part of the population; if he relinquished them, he left himself without means to carry on the government of the gold-fields.