The new governor, Lachlan Macquarie, on his arrival in the colony of New South Wales in the latter half of 1810, discovered that the town hospital was an affair of tents and temporary buildings established in the notorious "Rocks" area when the First Fleet arrived in 1788. Macquarie on the western edge of the Government Domain set aside land for a new Hospital, and a new road, Macquarie Street, for it. Plans were drawn up however the British Government refused funds for the project.
Macquarie not to be out done entered into a contract with a consortium of businessmen: Messrs Blaxcell, Riley and Wentworth, to erect the new hospital. In exchange they were to receive a monopoly on rum-imports and convict labour and supplies from which they could reasonably expect to recover the cost of the building and considerable profit. Their contract permitted them to import 45,000 (later increased to 60,000) gallons of rum to sell to the thirsty colonists. However, the Hospital did not turn out to be very profitable for the contractors.
On completion of the hospital, the now famous convict architect, Francis Greenway, was asked to report on the quality of the work. He condemned it, claiming that it "must soon fall into ruin" (there was a similar outcome when Greenway was asked to comment on the workmanship of St. Matthew's Anglican Church at Windsor). Greenway found that there were weak joints in the structural beams, feeble foundations, short cuts had been taken with the construction, rotting stonework and dry rot in the timbers. Even though Macquarie ordered the contractors to remedy these defects many remained hidden until the 1980s when extensive restoration work was undertaken.
A large central building that was the main hospital, and two smaller wings, which were quarters for the Surgeons, formed the hospital. In 1894 the present buildings in Macquarie Street that form Sydney Hospital replaced the central building, but the smaller wings remained intact. The Sydney Mint occupied the southern section and in recent times became a museum. The northern wing, built as quarters for the Principal Surgeon, remains today as the Macquarie Street colonnaded facade of the much-enlarged Parliament House.
D'Arcy Wentworth was the first Surgeon to reside in the building. Wentworth had other connections with the building. Firstly, he had been one of the three contractors who had built the Hospital under the "rum contract" with Macquarie, and secondly, his son, William Charles, journalist and explorer, is regarded as the "father of the constitution". Wentworth jnr. became one of the most important figures in the development of Parliamentary democracy in New South Wales.
Legislative Council in 1829 first moved into part of the Surgeon's Quarters. The surgeons remained until 1848, other rooms were at times occupied by other government officials, such as the Principal Supervisor of Convicts, and even by Sydney's first museum. By 1852 the Legislature had taken over the entire building.
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