By 1854, Britain was at war with Russia and Charles Hotham wanted to captain a ship. It was made clear to him that the position of Lieutenant-Governor of Victoria was the only assignment available. He accepted with, in his words, ‘a sorrowful heart' but his welcome to the colony was an exuberant one. Hotham’s rank and naval success probably impressed many Melbourne residents who felt that strong leadership had been lacking under La Trobe.
Hotham was shocked at both the price of labour in the city (the salaries that La Trobe had approved to retain civil servants for instance) and the number of miners who were failing to pay their license fees. Hotham was presented with figures that showed there were almost 40,000 miners (out of perhaps 80,000 miners) not paying their licence fee. Added to this, one of the largest drains on revenue was the payroll of commissioners and police ordered to collect the fees.
A reduction in the sale of land, a falling off in trade that reduced the customs revenue and a dip in gold production in 1853 meant that the budget for 1854 was nearly two million pounds short of the colony’s expenditure. Meanwhile imports continued to flood Melbourne and many who had speculated on prices for goods staying high were now declaring bankruptcy. Hotham had a grave financial problem.
Like La Trobe before him, tours of the gold regions had given Hotham the impression of men finding more gold than they did- successful miners were more visible than unsuccessful ones. One of Hotham’s first actions was to order twice-weekly licence searches. Most of Hotham’s advisers were against this decision. As was Commissioner Robert William Rede of Ballarat.
After the events described in the lead up to the Eureka Stockade, Hotham sent 450 soldiers and police to Ballarat, and gave Rede permission to use them as he saw fit. Fearing a march of angry diggers on Melbourne, Hotham swore in special constables to defend the city.
The people of Melbourne agreed with Hotham, but when the feared insurgents didn’t arrive, a protest movement emerged in Melbourne supporting the diggers. The royal commission that Hotham had set up shortly before Eureka, validated most of the miners’ concerns. Hotham’s insistence on charging the diggers with 'High treason' turned the public against their governor.
The new Miner’s Right was a success and over 50,000 had been purchased by the end of 1855.
Hotham never admitted that the licence hunts were wrong, only that they were poorly carried out. His refusal to grant an amnesty to the Eureka miners turned public opinion further from him and he was soon at odds with his own cabinet over financial matters.
A job Hotham had never wanted turned into one that he was determined to run by his own hand, without the consultation of his colleagues and sometimes without even the aid of his secretary. Long hours took their toll and in November of 1855, Hotham tendered his resignation. Possibly brought on by overwork, a cold that turned to a fever killed him on 31 December that same year.