Until 1846, La Trobe’s government of Port Phillip proved effective and was the result of his close working relationship with Sir George Gipps and the clear instructions he received. Fitzroy’s approach was different as he expected his subordinates to act on their own initiative and did not maintain the same level of contact with La Trobe. Fitzroy was supported by his experienced Colonial Secretary, Deas Thomson who knew La Trobe well recognising that he preferred ‘to avoid taking responsibility’ with ‘his constant reference to the Head of the Government on points which he ought to settle at his discretion’, a major weakness in his management style.  This reticence would undoubtedly have posed a problem for effective governance in Victoria once it was separated from NSW but it was magnified by the discovery of gold. Without clear instructions La Trobe floundered.
Initially, the discovery of gold created economic problems in Victoria. John Sherer reported:
No wonder that the small shop keeper was shutting up and abandoning his counter; no wonder that seamen were running away from their ships, printers from their type, doctors from their drugs. In fact everything has assumed a revolutionary character. 
Charles La Trobe
Wages doubled between 1851 and 1853 but even with these inflated rates it was difficult to find and keep workers while surface gold was plentiful. Squatters had considerable difficulty keeping their sheep stations going with both the shortage and cost of labour. Farmers were badly affected haemorrhaging workers though the harvest in January 1852 was saved and increased demand saw higher prices paid for the grain produced. However, continued labour shortages made profitable wheat-farming difficult for the next two years resulting in the bulk import of cheap flour. The few dairy farmers and vegetable-growers did well but between 1851 and 1853 the land under cultivation fell by 40 per cent. In the long run, however, during the 1850s the pastoral industry was extremely prosperous as wool prices rose and the diggers provided a huge new market for meat.
As people flocked to the diggings, Melbourne was deserted and La Trobe commented in October that of Melbourne’s 25,000 population ‘not one man is left’; 80 per cent of the police force had resigned and his civil servants deserted their posts.
Within the last three weeks the towns of Melbourne and Geelong and their large suburbs have been in appearance almost emptied of many classes of their male inhabitants…leaving their employers and their wives and families to take care of themselves…
Collins Street, Melbourne, 1851
Crime and poverty were rampant though La Trobe believed this was embroidered by the press.  In January 1852, of 35 ships in Melbourne, only three had full crews; 417 of their total crews of 816 men had deserted.  The city was described by an unsympathetic Sydney Morning Herald in very critical terms:
I must say that a worse regulated, worse governed, worse drained, worse lighted, worse watered town of note is not on the face of the globe…in a word, nowhere in the southern hemisphere does chaos reign so triumphant as in Melbourne. 
Experiences did, however, vary and other writers depicted the fledgling city in a more positive light. 
The discovery of gold exposed La Trobe’s limitations. In the twelve years he had been in the colony, its population had increased from 11,738 in 1841 to 77,345 in 1851 but by 1854 it reached 236,776. This derailed his plans for the development of the colony and created unstable conditions for his remaining months in Australia. He mistrusted social disorder and democracy and found the social instability created by the discovery of gold perplexing. Yet, he recognised in early July 1851, that his government of the goldfields must meet needs as they arose.  With increasing population and growing demands on the barely developed infrastructure, government expenditure dramatically increased and La Trobe readily adopted the licensing system already in place on the NSW goldfields to bring in revenue.
Melbourne City, 1851
The choice of candidates on 15 July for the Executive Council proved disastrous in conditions that would have tested even the most effective colonial administration.  Captain William Lonsdale was reluctantly appointed Colonial Secretary, a post he held until 1853 and for which he recognised he was entirely unfitted.  Alastair McKenzie, the Colonial Treasurer and James Cassell, the Collector of Customs proved equally ineffective. The final place went to William Stawell, Attorney-General from 1851 to 1857 and the most able individual on the Council on whom La Trobe especially relied.  The Argus was effusive in its support for Stawell while suggesting: ‘Would that every other office of the new Government were as adequately filled!’  Though he considered himself a liberal in politics, he was seen by many as impulsive and intolerant of opposition. La Trobe only nominated Lonsdale and Stawell to the Legislative Council; Cassell and McKenzie were ignored. This meant that the remaining three Government representatives were obliged to defend policies that they played no part in formulating. Serle concluded that: ‘indecisive leadership, inexperience and the narrow social sympathies which all displayed were quickly to discredit them.’  La Trobe desperately needed money to fund additional policing, but found his hands tied by a legislature dominated by squatters who loathed the miners since the stampede of workers to the gold fields threatened their livelihoods.
Elections for the Legislative Council took place in September though it did not meet until early November 1851. Government nominees and the squatters’ representatives elected under a restricted franchise were supposed to control the Council. However, elected members were generally unsympathetic to La Trobe, the Executive Council and official nominees but lacked the organisation, discipline or clearly expressed policies necessary for effective opposition. Melbourne  elected the most radical members; Geelong  and the country towns were represented by moderate members with democratic leanings, while the country electorates were mostly conservative. There was a group of businessmen from Melbourne, North and South Bourke  and Geelong nominally led by William Westgarth, leader of the Melbourne business community and John O’Shanassy, a shambling Irishman and leader of Victoria’s Catholics.  ‘Democrat’ in temper, they were liberal in viewpoint promoting values associated with Chartism especially adult suffrage, directly elected representatives and above all, land reform. The squatters formed another grouping whose views were ‘anti-democratic’ and who sought a return to the hierarchical order of pre-gold rush society. Conservative in attitude, they saw the Legislative Council as a means of protecting land policy and leaned politically towards the government.
Although party organisation was almost non-existent, pressure group politics was already evident in 1851. The Chamber of Commerce in Melbourne acted as the focus for business interests and in Geelong, local farmers influenced local politics. Popular reform organisations also emerged in Geelong: a People’s Association in July 1851 of some three hundred artisans, shopkeepers and others formed to promote ‘the moral, social and political advancement of the people’ and met several times before collapsing when the gold rushes began.  It was ‘determined to maintain the rights of the people as British subjects’ and Serle argues that there was ‘obvious chartist inspiration’ since two of its aims were land reform and equal rights.  The Association was characterised by its opponents as ‘republicans, chartists, socialists’, and although it appropriated Chartist rhetoric, the context for ‘Chartist inspiration’ in Victoria was very different from in Britain and its direct influence should not be exaggerated. In September, a Reform Association was formed in Melbourne to work for responsible self-government, the ballot, an extended franchise, fair electoral districts, abolition of state aid for religion and a national education system but it too collapsed under the influence of gold.  These two organisations consisted largely of immigrants of working-class or lower middle-class origin who were outside the colonial establishment and were determined that the social inequalities of Britain should not be replicated in Australia. Supported by the Argus, they represented the beginnings of democratic opposition to the government in and outside the Council.
 Minute of Deas Thomson on La Trobe to Colonial Secretary, 7 June 1848: NSW Archives Office, 4/2823, 48/466, cit, ibid, Drury, Dianne Reilly, La Trobe, p. 217.
 La Trobe was installed as Lieutenant-Governor on 15 July 1851, Argus, 16 July 1851, p. 2.
 Ibid, Sherer, John, The Gold-finder of Australia: how he went, how he fared, how he made his fortune, p. 9.
 La Trobe to Earl Grey, 10 October 1851, ‘Further Papers relative to the Recent Discovery of Gold in Australia’, Parliamentary Papers, Vol. lxiv, 1852-3, pp. 45-47.
 La Trobe to Earl Grey, 2 March 1852, ‘Further Papers relative to the Recent Discovery of Gold in Australia’, Parliamentary Papers, Vol. lxiv, 1852-3, pp. 170-171, printed in Clark2, pp. 30-34.
 The question of desertion by sailors in Australia was debated in May 1852, Hansard, House of Commons, Debates, 14 May 1852, Vol. 121, cc.630-633.
 Sydney Morning Herald, 4 November 1852, p. 8.
 For example, Davison, Graeme, ‘Gold-Rush Melbourne’, in ibid, McCalman, Iain, Cook, Alexander, and Reeves, Andrew, (eds.), Gold, pp. 52-66.
 La Trobe to Earl Grey, 8 July 1851, ‘Further Papers relative to the Recent Discovery of Gold in Australia’, Parliamentary Papers, Vol. lxiv, 1852-3, 1607, pp. 219-221.
 Birrell, Ralph W., Staking a Claim: Gold and the Development of Victorian Mining Law, (Melbourne University Press), 1998, considers the problems faced in establishing equitable and workable mining legislation.
 ‘The Appointments’, Argus, 15 July 1851, p. 1, and ‘The Appointments’, Geelong Advertiser, 18 July 1851, p. 2; see also ‘Official Appointments’, Sydney Morning Herald, 4 August 1851, p. 2..
 Penny, B. R., ‘William Lonsdale (1799-1864)’, ADB, Vol. 2, pp. 124-12.
 Francis, Charles, ‘Sir William Foster Stawell (1815-1889)’, ADB, Vol. 6, pp. 174-177.
 Argus, 14 July 1851, p. 2.
 Serle, p. 13.
 La Trobe issued a proclamation in the Government Gazette including the date for the first session of the Legislative Council on 17 October, Argus, 23 October 1851.
 ‘City Elections’, Argus, 11 September 1851, pp. 2-3, ‘The City Election, Declaration of the Poll’, Argus, 15 September 1851, p. 2.
 ‘Geelong’, Argus, 8 September 1851, p. 4.
 ‘The Elections, South Bourke, Evelyn and Mornington’, Argus, 10 September 1851, p. 2.
 Serle, Geoffrey, ‘William Westgarth (1815-1889)’, ADB, Vol. 6, pp. 379-383, Ingham, S. M., ‘Sir John O’Shanassy (1818-1883)’, ADB, Vol. 5, pp. 378-382.
 ‘The People’s Association’, Argus, 30 August 1851, p. 4, detailed the second meeting of the Association.
 Serle, p. 17.
 ‘Melbourne Reform Association’, Argus, 20 September 1851, p. 2.