Macquarie was a conservative disciplinarian who believed, in the words of the historian Manning Clark, "that the Protestant religion and British institutions were indispensable both for liberty and for a high material civilisation." When he arrived in Sydney in December 1809, he found a struggling, chaotic colony which was still basically a prison camp, with barely 5,000 European inhabitants. Macquarie ruled the colony as an enlightened despot, breaking the power of the Army officers such as John Macarthur who had run the place since Bligh's overthrow.
Macquarie made it clear that he had a vision for Australia's future. He ordered the construction of roads, bridges, wharves, churches and public buildings. The oldest surviving buildings in Sydney, such as the Hyde Park Barracks, have his name inscribed on their porticoes. He appointed magistrates to outlying posts such as Van Diemen's Land and the Bay of Islands (now New Zealand). He founded new towns such as Richmond, Windsor, Pitt Town and Castlereagh. He appointed a Colonial Secretary, a government printer and a government architect. All these actions reflected his view that New South Wales, despite its origins as a penal settlement, was now to be seen as a part of the British Empire, where a free people would live and prosper and eventually govern themselves.
The end of the Napoleonic Wars in 1815 brought a renewed flood of both convicts and settlers to New South Wales, as the sealanes became free and as the rate of unemployment and crime in Britain rose (as they always did when armies and navies were demobilised). Macquarie presided over a rapid increase in population and in economic activity - by the time of his departure the population had reached 35,000. The colony began to have a life beyond its functions as a penal settlement, and an increasing proportion of the population earned their own living. All this, in Macquarie's eyes, made a new social policy necessary.
Central to Macquarie's policy was his treatment of the emancipists: convicts whose sentences had expired or who had been given conditional or absolute pardons. By 1810 these outnumbered the free settlers, and Macquarie insisted that they be treated as social equals. He set the tone himself by appointing emancipists to government positions: Francis Greenway as colonial architect and Dr William Redfern as colonial surgeon. He scandalised settler opinion by appointing an emancipist, Andrew Thompson, as a magistrate, and by inviting emancipists to tea at Government House. In exchange, Macquarie demanded that the ex-convicts live reformed lives, and in particular insisted on proper marriages.
Macquarie was the greatest sponsor of exploration the colony had yet seen. In 1813 he sent Blaxland, Wentworth and Lawson across the Blue Mountains, where they found the great plains of the interior. There he ordered the establishment of Bathurst, Australia's first inland city. He appointed John Oxley as surveyor-general and sent him on expeditions up the coast of New South Wales and inland to find new rivers and new lands for settlement. Oxley discovered the rich Northern Rivers and New England regions of New South Wales, and in what is now Queensland he explored the present site of Brisbane.
Explorers soon learned that the Governor liked things named after him: so Australia has the Macquarie River and Mount Macquarie, Lake Macquarie and Port Macquarie, Macquarie Harbour and Macquarie Island. Elizabeth Bay and Mrs Macquarie's Chair (a headland in Sydney Harbour) are named for his wife. Macquarie's own contribution to Australian nomenclature was the name "Australia," suggested by Matthew Flinders but first used in an official despatch by Macquarie in 1817.
Macquarie's policies, especially his championing of the emancipists and the lavish expenditure of government money on public works, aroused opposition both in the colony and in London, where the government still saw New South Wales as a place to dump convicts and not as a future dominion of the Empire. His statement, in a letter to the Colonial Secretary, that "free settlers in general... are by far the most discontented persons in the country," and that "emancipated convicts, or persons become free by servitude, made in many instances the best description of settlers," was much held against him.
Leaders of the free settler community, such as Wentworth and Macarthur, complained to London about Macquarie's policies, and in 1819 the government appointed an English judge, John Bigge, to visit New South Wales and report on its administration. Bigge generally agreed with the settlers' criticisms, and his reports on the colony led to Macquarie's resignation in 1821: he had however served longer than any other governor. Bigge also recommended that no governor should again be allowed to rule as an autocrat, and in 1825 the New South Wales Legislative Council, Australia's first legislative body, was appointed to advise the governor.
Macquarie returned to Scotland, and died in London in 1824 while busy defending himself against Bigge's charges. But his reputation continued to grow after his death, especially among the emancipists and their descendants, who were the majority of the Australian population until the gold rushes. Today he is regarded by many as the real founder of Australia as a country, rather than as a prison camp. The nationalist school of Australian historians have treated him as a proto-nationalist hero. His grave in Mull is maintained at the expense of the National Trust of Australia and is inscribed "The Father of Australia." As well as the many geographical features named after him in his lifetime, he is commemorated by Macquarie University in Sydney, which publishes the Macquarie Dictionary.