1870–90 Economic Progress
While the development of the North Island was slowed by fighting, that of the South Island accelerated thanks to pastoral farming and gold mining. During the 1850s and 1860s the eastern plains and hills, normally tussock covered and so immediately useful, were opened to sheep. In the North Island only the Wairarapa and Hawke's Bay districts showed a comparable development. Wool exports became, and have remained, basic to the country's economy. Sheep did not entail intensive settlement, but with a handful of men to manage them, spread on immense runs from the coast to the mountains. Agriculture was mainly confined to the neighbourhood of towns.
In the 1860s the gold rushes vitalised the South Island, especially Otago and the West Coast. In 1861 Gabriel Read, attracted by a bonus offered by the Otago provincial government, stumbled upon the rich Tuapeka field. Subsequent prospecting and discoveries drew men west and north into Central Otago, to the Dunstan mountains and the area of the great lakes. Miners from Australia, where the goldfields were petering out, swarmed across the Tasman, to the advantage of the shipping companies. Otago's population and exports sky-rocketed, though the great boom was over by 1865. But by that time the remote West Coast had become the magnet, as its rivers and beaches proved rich in gold. By 1867 some 30,000 people lived where there had hardly been a settler a few years before.
Understandably, the South Island was rich in the 1860s. Land settlement went ahead; pastoralism, agriculture, grew; and the commercial life of the towns quickened. Gold brought wealth to many – to traders, bankers, businessmen, and farmers rather than to the diggers themselves. Even North Island farmers felt the benefit of a new market for foodstuffs.
For its part, the North Island made considerable progress during the decade of war: population grew, farming expanded, imports and exports increased, especially in the later 1860s after the end of resistance in the Waikato. Military expenditure had its advantages, and in 1868 the Coromandel gold discoveries brought prosperity to Auckland at a time when Otago and Canterbury were suffering from depression. But the overall pattern of development was unmistakable: whereas in 1860 Auckland led in population and economic activity and the North Island as a whole outweighed the South, 10 years later the South Island had more than trebled its population to over 150,000 while the North Island had merely grown from over 40,000 to nearly 100,000, exclusive of the Maoris, and Otago, prince among provinces, had a quarter of the colony's total population and provided a third of its exports.