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Cities are never discovered: they can only ever be founded (established).

Melbourne lies in Port Phillip Bay, and this area was only discovered by Europeans in 1802, when Matthew Flinders explored the bay while circumnavigating Australia.

A year later, the British Government instructed Lieutenant-Governor David Collins to establish a settlement on the southern coast, specifically, the Mornington Peninsula. For various reasons, this settlement failed.

Native born Australian John Batman applied for land in the Westernport Bay area of Port Phillip. After not being granted any, in May 1835 he led a syndicate calling themselves the 'Port Phillip Association' to explore Port Phillip Bay, looking for suitable sites for a settlement. On 6 June 1835, Batman signed a 'treaty' with the Aborigines, giving him free access to almost 250,000 hectares of land. 2 months later, Governor Bourke declared Batman's treaties invalid, and issued a proclamation warning off him and his syndicate as trespassers on crown land. Despite the attempts at government intervention, the foundling settlement of Melbourne remained, and flourished. John Batman is considered to be the founder of Melbourne.

The new township was surveyed and named as Melbourne on 3 March 1837, in honour of the British Prime Minister, Lord Melbourne

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