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Melbourne was founded primarily in response to the need for more pastureland and for the settlers to have a base from which to spread out. It was also founded because John Batman started a settlement "illegally".

As a native born Australian, Batman wished to open up new pastureland and promote the growth of the colonies. He applied for land in the Westernport Bay area of southern Australia, now Victoria, but was refused his request. In May 1835, he explored Port Phillip Bay, looking for suitable sites to settle. On 6 June 1835, he signed a 'treaty' with the Aborigines, which enabled him to have free access to almost 250,000 hectares of land. Two months later, Governor Bourke declared Batman's treaties invalid, and issued a proclamation warning off him and his supporters as trespassers on crown land.

Despite the attempts at government intervention, the foundling settlement of Melbourne remained, and flourished. 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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