Lonsdale continued to administer the Port Phillip District till 1839, when C. J. Latrobe was appointed Superintendent, or Lieutenant-Governor. In the mean time the settlement had spread so rapidly and the mass of business requiring attention was so large and complex, that it was no longer possible to govern the district from Sydney. To Latrobe was therefore entrusted a wide margin of discretion, and, as he proved himself to be an energetic and capable officer, the control of affairs was left in his hands, subject only to the general supervision of the Governor, to whom he was subordinate.

The claims based by Batman on his 'treaty' with the eight 'chiefs' were of course not recognized. The lands of Port Phillip were placed under the same regulations as affected the remainder of the territory of New South Wales, and will be more particularly considered in Chapter XVI. The Port Phillip Association pressed its case very pertinaciously, and at length the Government of New South Wales agreed to recognize its pioneering work to the value of 7,000 pounds, to be paid in land. Accordingly, in February 1838, an agent of the company attended a land sale, and bought 9,500 acres near Geelong for 7,919 pounds, of which 7,000 pounds was remitted by the Government.

Batman himself did not live long in the country to which he had come in such strange circumstances. He died in 1839. It cannot be said that he was generously treated. Even his little house and garden of twenty acres close to the Melbourne township were taken away from his widow, the Government merely allowing the building material to be removed from the ground 'as an indulgence.' The day of free land grants was gone. But Batman, whatever amusement may be derived from his treaty, had done enterprising and courageous work, and he was personally an estimable man. There were ex-convicts across the Murray enjoying enormous incomes through the mere good luck that they had come to the country at a time when land was easily obtained, and had grown rich in consequence of the rise in values created by the growth of population. By contrast this genuine pioneer of settlement was shabbily handled. He did not happen to be one of fortune's favourites, and the haughty frown of authority was turned more severely on him, perhaps, because he had forced the road for advancing settlement in spite of official disapproval.

In pursuance of the same policy, the Hentys of Portland were not permitted to hold unquestioned the land upon which they had settled in 1834; though after much correspondence they were awarded compensation to the value of 1,750 pounds. The pioneers were certainly not treated liberally by the Government.