The Port Arthur penal settlement began life as a small timber station in 1830. Originally designed as a replacement for the recently closed timber camp at Birches Bay, Port Arthur quickly grew in importance within the penal system of the colonies.
The initial decade of settlement saw a penal station hacked from the bush, and the first manufactories - such as ship building, shoemaking, smithing, timber and brick making - established. The 1840s witnessed a consolidation of the industrial and penal nature of the settlement as the convict population reached over 1100. In 1842 a huge flour mill and granary (later the penitentiary) was begun, as well as the construction of a hospital. 1848 saw the first stone laid for the Separate Prison, the completion of which brought about a shift in punishment philosophy from physical to mental subjugation. Port Arthur also expanded geographically as the convicts pushed further into the encircling hills to extract the valuable timber.
The 1853 cessation of transportation resulted in fewer transportees arriving at the station. However, since Port Arthur was one of the few secondary punishment stations operating in the colonies, it still received a large proportion of colonially sentenced men, as well as the old transportees still within the system.
The 1850s and 1860s were years of remarkable activity, that aimed to make the station economically sustainable. Expansive tracts of bush were harvested to feed a burgeoning timber industry and large plots of ground were turned over to cultivation. 1857 saw the conversion of the old flour mill and granary into a penitentiary, adjacent to which was built a large range of workshops housing a steam-driven sawmill, blacksmith and forge, and carpentry workshop. In 1864 the last great project at the site, the Asylum, was also begun.
This pulse of energy, however, could not be sustained. The 1860s shuffled into the 1870s and the settlement began to enter its twilight. Numbers of convicts dwindled, those remaining behind were too aged, infirm or insane to be of any use. The settlement that had hummed with life slowly ground to a standstill. The last convict was shipped out in 1877.