The Hunter Valley was once occupied by the Awabakal and Worimi Aborigines. Indeed the foreshore area adjacent what is now Newcastle Harbour was once a major campsite. They called the river 'Maiyarn', meaning 'river that comes from the sea'.
When Captain Cook sailed up the east coast in 1770 he noted what is now called Nobbys Head at the mouth of the Hunter River but did not investigate further. In 1797, while pursuing a group of escapees, Lieutenant John Shortland landed in the vicinity, 'discovered' the river, which he named after Governor Hunter (though it was known as Coal River for some time), and reported coal deposits. It was then that the potential of the area was recognised. The following year ships began collecting coal from the riverbanks and selling it in Sydney and in 1799 a shipment of local coal , which was sent to Bengal, was Australia's first export.
In 1801 a convict camp known as King's Town (after Governor King) was established to mine the coal and cut timber. What is thought to be the first coal mine in the Southern Hemisphere was sunk at Colliers Point, below Fort Scratchley, in 1801 and the first shipment of coal (24 tons) dispatched to Sydney (by comparison, in 1997, the 272-metre S.G. Universe carried 148 000 tons of coal to the state capital). However, the settlement was closed less than a year later. Around this time timber cutting also began in the Hunter Valley.
The real beginning of the town was in 1804 when the administration in Sydney, under Governor King, decided that the site's isolation, combined with the hard manual labour of coalmining, lime-burning, salt-making, timber-cutting and construction work, would make the base for an ideal secondary penal colony for recidivists. The Lower Hunter was then covered in subtropical forest which was rich in cedar, so much so that the tributaries around Newcastle were then known as the Cedar Arms. The only initial source of lime were Aboriginal middens at Stockton while the salt was attained through the evaporation of the highly saline water of the Stockton mangroves.
The penal settlement was placed under the direction of Lieutenant Menzies though he soon resigned and Charles Throsby was in charge from 1805-08. The convict settlement, named Newcastle after the English city, rapidly gained a reputation as a hellhole. The regime was severe and the work arduous. From 1814 it became the major prison in NSW with over a thousand convicts. An early Australian novel, Ralph Rashleigh (written in the 1840s), by ex-convict James Tucker, describes dung-eating, flogging and murder at the penal colony.
The settlement remained small but it did start to develop. In 1816 a public school was built at East Newcastle (the oldest public school in Australia) and the following year both a gaol and a hospital were erected, though no buildings survive from this rough-and-ready period.
The convict settlement only lasted for twenty years. The gradual movement of settlers up the coast and inland around the Hawkesbury meant that the original isolation of the 'undesirable elements' disappeared. The convicts were moved further up the coast to Port Macquarie in 1823 as settlement of the Hunter Valley began.
When the town site was surveyed in 1822-23 there were 71 convict homes and 13 government buildings. The government initially managed the mines but the Australian Agricultural Company acquired sole rights to the coal in 1828 and opened the first modern colliery in 1831.
By the 1850s the industrial base of the city had been established and the commercial sector began to grow. Demand built up with the growth of Melbourne and the development of the rail system (extended to Maitland in 1857). Newcastle rapidly became a major coal producer, port and railhead. Mining villages such as Stockton, Carrington, Cardiff, Swansea, Charlestown, Minmi, New Lambton, Wallsend, Hamilton, Adamstown, Abermain, Gateshead, Merewether and Waratah began to develop. Some of these names reflected the fact that many early immigrants were coalminers from northern England, Scotland and Wales.
Copper smelting, potteries, shipbuilding, engineering and metal-working diversified the economic base. The extension of the rail system into the Hunter Valley also meant that Newcastle increasingly became a major service centre for the agricultural areas.
The prosperity of the 1870s and 1880s saw a flurry of substantial buildings emerge engendering a strong heritage of Victorian architecture. The population increased eight-fold between 1860 and 1890 and by the turn of the century it exceeded 50 000.
A major moment in Newcastle's history occurred in 1911 when BHP chose the city as the site for its steelworks due to the abundance of coal. It opened in 1915 with the government providing port facilities and roadways. The city was soon reoriented from coal to a predominant emphasis on steel production, iron-smelting and subsidiary industries.
Steel remained the lifeblood of the city but, despite record company profits, BHP, in 1997, announced plans to abandon most aspects of its steelmaking operations in Newcastle in the year 2000. However, the phase-out has been gradual and other aspects of the local manufacturing sector are still strong. Retail trade, health and education are the other major employment sectors.