is situated in the lower valley of the Shag River, about 5 miles west of Shag Point on the North Otago coastline. North and west the land rises to hills and mountains. The Oamaru-Dunedin main highway and the South Island Main Trunk railway pass through Palmerston. The town is also a junction for a branch railway to Dunback, 8 miles north-west. Palmerston is 36 miles north-east by road from Dunedin (41 miles by rail) and 37 miles south-west by road or rail from Oamaru.
Palmerston is a servicing and distributing centre for a predominantly sheep-farming district. There is some dairy farming. At Goodwood (5 miles south) there is a cheese factory. Lime is quarried at Dunback. Sub-bituminous coal is mined at Shag Point, and the collieries are served by a private railway to Shag Point township (6 miles north-east) on the main line. Industries in Palmerston include general engineering, sawmilling, and cardboard box manufacturing.
Palmerston was within the area opened up for sheep runs in 1852, but portions of the district may have been occupied by pastoralists a year or two earlier. In 1851 Chas. Johnson Pharazyn and Charles James Nairn, who had explored the district, reported to Captain William Cargill of the discovery of auriferous quartz on what was afterwards their Goodwood station. Charles Henry Kettle made the first official exploration of the area in February 1851. In 1855 W. H. Pearson, J. Saunders, and P. Napier travelled up the Shag Valley and reached the Maniototo Plain, and were probably the first to penetrate far into the immediate hinterland. Palmerston came into existence as a camp site in 1862 at the beginning of a route via the Shag Valley to the Kyeburn Valley and the Central Otago gold diggings. The town was surveyed in 1864 and named Palmerston, probably after the British Prime Minister of the day. In 1887 gold discoveries were made in the district northwest and west of Palmerston, and four gold dredges were working on the Shag River upstream from Palmerston in 1899, two continuing to operate until 1904. Other minerals, especially scheelite, have been worked in the district but by 1906 most mining had ceased. A notable resident of the district was Sir John McKenzie whose property was located near Bushey, 3 miles north of Palmerston. Palmerston was created a municipality in 1872 and in 1877 was constituted a borough.
POPULATION: 1951 census, 894; 1956 census, 1,003; 1961 census, 868.
by Brian Newton Davis, M.A., Vicar, St. Philips, Karori West, Wellington and Edward Stewart Dollimore, Research Officer, Department of Lands and Survey, Wellington.