Gold found at Gabriel’s Gully

Gold was identified in a number of Otago waterways in the 1850s, but the leaders of the Presbyterian settlement were ambivalent: a rush might bring riches, but also disorder and a labour shortage. Rewards for finding gold were on offer by 1860, a sign that official opinion was shifting. Gabriel Read, a Tasmanian prospector who had tried the Californian goldfields without success and the Victorian goldfields with only limited success, arrived at Port Chalmers in February 1861. With the encouragement of J. L. C. Richardson, speaker of the Otago Provincial Council, and two Tokomairiro farmers, John Gillies and John Hardy, he set out for the place in the Tuapeka district where Edward Peters had been prospecting. Peters, an Indian-born miner known as 'Black Peter', had found gold in the area in about 1858, but had not proven that the deposits were extensive enough to be worked.

On 23 May 1861, in the gully that still bears his name, Read found gold 'shining like the stars in Orion on a dark frosty night'. The Otago Witness reported the find on 8 June, and Hardy's statement to the Provincial Council on 28 June set off a dramatic public response. By December perhaps 14,000 people, several times Dunedin's population, had pitched their tents on the Tuapeka and Waipori fields. A slice of Victoria's goldfields population crossed the Tasman, not only diggers but also businesspeople and entertainers. In August 1862 Horatio Hartley and Christopher Reilly deposited a bag of gold weighing just under 40 kilograms at the Treasury in Dunedin, starting the rush to the Dunstan, and the summer of 1862–63 brought finds in the Arrow and Shotover rivers. Te Ara gives the peak goldfields population as 22,000 in 1863 in one entry and an estimated 24,000 in another. Te Ara also notes there were no 'rushes' after 1864.

The 1860s as a whole saw Otago earn £10 million from gold exports, compared with £3.57 million from wool. NZHistory states that Otago's population soared by 80% between 1861 and 1864, when Dunedin became the country's largest city; Te Ara puts it more cautiously, saying Dunedin was New Zealand's largest urban centre in the mid-1860s and again between 1878 and 1881. The gold wealth also made possible Otago's university, founded in 1869 (see University of Otago founded). Read himself left Gabriel's Gully in July 1861 and went on to discover the Waitāhuna field, but his further prospecting for the provincial council was unsuccessful, and he resigned on 6 November, the day after the council agreed to pay him the £500 bonus it had set up in 1857. He was eventually awarded £1,000. By 1864 he had returned to Tasmania, and he died in a Tasmanian mental hospital in 1894.

As European miners left Otago for the new West Coast goldfields, the Dunedin Chamber of Commerce, with the provincial government's encouragement, recruited Chinese miners, who were thought willing to rework abandoned claims. The first 12 men arrived from Victoria in 1866, and by late 1869 more than 2,000 Chinese men had come, most from Panyu county in Guangdong province. As goldfields work dwindled, anti-Chinese prejudice grew. The Chinese Immigrants Act 1881 imposed a £10 poll tax on Chinese migrants, raised to £100 in 1896. The tax was waived from 1934 but not repealed until 1944, and in 2002 the New Zealand government officially apologised to the Chinese community for it. At Gabriel's Gully today, the Gabriel Read Memorial Reserve has a 'pick and shovel' monument erected for the centennial celebrations in 1961.