The second notable thing done by Batman on this expedition was to take the REBECCA'S boat up the river Yarra to a place where a ridge of rocks blocked the inrush of the tide, and where therefore he could obtain fresh water. He scrutinized the slope on the north bank of the stream, and pencilled in his notebook these words: 'The boat went up the large river I have spoken of, which comes from the east, and I am glad to state about six miles up found the river all good water and very deep. This will be the place for a village.' Batman did not discover the Yarra, nor was he the first European to look upon this site. That had been done in 1803. But he was the man to indicate where Melbourne would be built; and he actually marked upon his sketch-map the words 'reserved for a township and other purposes.'

It is very remarkable that, of the six state capitals of Australia, the only one which stands to-day precisely in the place where it was in the first Instance intended to build it, is Melbourne. Three of the states were originally colonized from England, and in not one of those instances was any survey made, before shiploads of people were sent 16,000 miles, to ascertain where it would be most desirable to put them. A sensible man would not start to build a house without making a preliminary examination of the ground available, in order that he might lay his foundations in the best situation. But no such forethought was shown in determining the proper localities for three colonies which were to be the homes of hundreds of thousands of people. New South Wales was originally intended to be centred at Botany Bay, and had Arthur Phillip followed the letter of his instructions he would have commenced his work with misfortune and failure. His own promptitude and initiative saved the situation there. In the Western Australian instance the first colonists were left shivering in misery on the white sand-dunes of Garden Island until the site of Perth was found. South Australia was intended to be established on Kangaroo Island, which was lauded in glowing descriptions written by those who had never been there; but Colonel Light recognized at a glance that a blunder had been perpetrated, and insisted on the site of Adelaide. The cases of Hobart and Brisbane are not so serious, though there also the situations originally chosen were afterwards found to be undesirable. But John Batman's 'place for a village' was an excellent choice, which had not to be altered afterwards, and the village - rather large for its name, however - stands in justification of his judgement.

Batman hurried back to Launceston to report what he had done, and to advance the claims of his syndicate, the Port Phillip Association, to the territory which he professed to have acquired by treaty. He left behind him three of his servants, with three months' rations, to guard the estate against intruders.

The latter move was not so absurd as it may seem. Batman knew that there were other Launceston adventurers who had designs upon Port Phillip. In fact, his rivals were on the move while he was engaged in writing voluminous letters in support of his claims. The leader of the opposition party was John Pascoe Fawkner, who, as a lad of eleven, had, in company with his father, been one of Colonel Collins's party in the CALCUTTA when that officer's abortive colony at Port Phillip was founded and abandoned in 1803. Fawkner had purchased the ENTERPRISE, and was making preparations for an expedition of his own when Batman returned with his astonishing tale. On July 29 the schooner sailed. Fawkner himself went on board, but became so ill that he had to be put ashore. Hardly had the ENTERPRISE entered Port Phillip than Batman's representatives, in a whaleboat, stopped her and warned her company that 'trespassers would be prosecuted.' But there was no quarrel, and the ENTERPRISE worked her way up the bay and the river, landing Fawkner's people on the very site which Batman had selected for his village.

Three days later appeared J. H. Wedge, Assistant Surveyor-General of Van Diemen's Land and one of Batman's syndicate, who informed the invaders that they were encamped upon the tract of land obtained by Batman 'by a treaty with the natives.' But both parties remained, and both were alike trespassers in the view of Governor Bourke. The solemn proclamation issued by him commenced: 'Whereas it hath been represented to me that divers of His Majesty's subjects have taken possession of lands of the Crown'; it admonished them that they were liable to be dealt with 'as other invaders upon the vacant lands of the Crown'; and it ended with the customary flourish, 'God save the King.'

But it was useless to issue prohibitions. Batman's party and Fawkner's were alike eager discoverers of good pastures, and at Port Phillip they found great areas of grass-land upon which thousands of sheep and cattle could fatten. To permit this great stretch of rich country to remain unoccupied was absurd. Even before either of the rival syndicates could bring their sheep across Bass Strait, a third claimant, John Aitkin, landed a flock on the east side of Port Phillip - near Arthur's seat - and became the first squatter in this part of Australia; and there was quite a rush of land-seekers to the new territory before any of them knew of Governor Bourke's proclamation. 'All I see I claim,' was the rule of the new-comers as they ascended hills overlooking desirable territory.