The 1880s were a period of extraordinary growth for Melbourne, fueled by consumer confidence, easy credit, and soaring land prices. Known as the “land boom,” this era saw Melbourne reputedly become the richest city in the world and the second-largest in the British Empire after London. The decade opened with the 1880 Melbourne International Exhibition in the purpose-built Exhibition Building, and marked advances in infrastructure, including a telephone exchange, electric lighting in the Eastern Market, and the launch of the city’s cable tramway system in 1885, which became one of the world’s most extensive by 1890.

The city’s opulence earned it the nickname “Marvellous Melbourne,” coined by visiting English journalist George Augustus Henry Sala in 1885. During this period, grand commercial buildings, hotels, banks, coffee palaces, terrace houses, and palatial mansions proliferated. The establishment of the Melbourne Hydraulic Power Company in 1886 enabled high-pressure piped water and hydraulically powered elevators, paving the way for the city’s first high-rise buildings. The radial rail network also expanded, connecting the suburbs to the booming city.

Melbourne’s land boom peaked in 1888, the year of the Centennial Exhibition. However, the early 1890s brought a severe economic collapse as property and finance bubbles burst. Sixteen small land banks and building societies failed, 133 limited companies went into liquidation, and construction virtually ceased until the late 1890s. The financial crisis contributed to the wider Australian economic depression of the 1890s and the 1893 banking crisis, leaving a lasting impact on the city’s economy.

At the time of Australia’s federation on 1 January 1901, Melbourne became the temporary seat of government for the new Commonwealth. The first federal parliament convened on 9 May 1901 in the Royal Exhibition Building before moving to the Victorian Parliament House, where it remained until Canberra was established as the permanent capital in 1927. The Governor-General resided at Government House in Melbourne until 1930, and many major national institutions continued to operate in the city well into the 20th century.

During World War II, Melbourne played a strategic role by hosting American military forces engaged in the Pacific campaign against Japan. The government requisitioned key facilities, including the Melbourne Cricket Ground, for military use, highlighting the city’s continued national importance.