Land around the port was taken up by pastoralists as early as the 1840s. Settlement started in the 1850s when a start was made with the MacDonnell Light house, named after the then Governor of South Australia. When finished it started operating on 1 January 1859, its first keeper was Captain Ben Germein with John Dagwell as his assistant.
Ben arrived on the ‘South Australian’ in 1837 with his two brothers, John and wife Olinda, and Samuel as well as their sister Thirza, wife of William Doddridge. Their father John and mother Christina did not arrive until 1840 on the ill-dated ‘Java’. John Senior worked for the South Australian Company. Ben later followed his father in the merchant navy and once took a ship through the Murray mouth as far as Goolwa.
Ben Germein was later involved in attempts to assist the wrecked Admella in 1859 and the John Ormerod in 1861. For his efforts he was awarded the Gold Medal of the Royal Humane Society and a Silver Medal from Victoria and South Australia. Germein also was instrumental in the location of the town of Port MacDonnell which was declared a port on 4 April 1860. When surveyed it was named Crete-Warta but the Governor preferred MacDonnell.
The first town blocks were sold in June 1860. Within the year a start was made with a jetty and by 1863 it also had a lifeboat. Germein resigned from his job in 1864 and was replaced in July by John Carson.
By 1862 the new town had a population of about six hundred and fifty, two hotels, the MacDonnell and the Victoria Hotel (see picture left), a Customs House, Police Station, Post Office, Sunday School, mail coach and a direct link to Adelaide, via Mount Gambier and Strathalbyn.
By the end of the decade it had a school, several stores,. a flour mill, shoemaker, shipping agency, warehouse, ship building industry, tannery, brewery, blacksmith, coopers, carpenters, farmers, soap works and many other facilities usually found in country towns.
In 1861 the town had its first race meeting, Robert Harrison opened the first school, built with timber from the wrecked Admella, and seventeen students were on the roll. Two years later a new and larger school was completed and used for the next ninety years. As the town grew more students were enrolled and a number of other schools built in the surrounding area.
Two of the best known residents were Adam Lindsay Gordon and his wife Margaret, who lived just out of town at Dingley Dell, during 1864 and 1865.
Shipping provided the main income for the town. Goods which were landed at the jetty had to be transported inland to Mount Gambier, Penola, Naracoorte and many other towns. Exports which left the town included wool, sheep and kangaroo skins, wheat, from as far away as Victoria, potatoes, flour, bark, tallow, honey, timber and many other products.
By the end of the 1860s there were enough people in town and surrounding smaller settlements to warrant the proclamation of the District Council of Port MacDonnell.
During the 1870s Port MacDonnell was the second busiest port in South Australia after Port Adelaide. During this decade several ships were also wrecked, including the Orwell in 1873, Seabird, also in 1873, Geltwood in 1875, with the loss of twenty-seven crewmembers, and the Agnes, Countess and Galatea, all in 1876.
By the end of the 1870s, railways were started in the South East, connecting several towns but not Port MacDonnell, whose council had voted against it. Ultimately this resulted in a loss of trade and consequently a loss of population. Whereas during the mid 1870s nearly a thousand people called Port MacDonnell home, twenty years later there was less than half that number.
However by the 1990s more than 2,400 people were living in the District Council area of Port MacDonnell.
Reference – South Australian History