The first Coal River settlement was abandoned by Government towards the end of 1802, however the possibility of establishing valuable commercial enterprise coupled with a desire to remove the worst of the Irish insurgents from Sydney district in the aftermath of the Rebellion at Castle Hill, encouraged Governor King to re-open the settlement.
Lieut. Charles Menzies
Twenty-one year old Lieut. Charles Menzies of the Royal Marines offered his services to Governor King on 14th March 1804 -
Lieutenant Menzies to Governor King,
14th March 1804.
His Majesty's Ship Calcutta, Port Jackson
May I claim your Excellency's permission to address you on a subject in which my interest, as well as inclination, is greatly concerned. Having learned from Captain Woodriffe this morning that a settlement is about to be formed at the Coal River, I beg leave to offer my services (should no officer as yet be fixed on) to superintend the government of that place, and will feel peculiarly happy should my offer be honored with your Excellency's approbation. I have etc., C.A.F.N. Menzies, Lieut. Royal Marines
Governor King accepted the offer and a settlement was re-established under Lieut Menzies in that same month -
To First Lieutenant C.A.F.N. Menzies of the Royal Marines, having disembarked from His Majesty’s ship Calcutta at the Governor’s Request, That Officer is appointed to Command and Superintend the Settlement to be re established at the Coal Harbour and Hunter’s River. - March 18, 1804.
Instructions to Lieut. Menzies
I. The Coals and Timber of all descriptions are the entire and exclusive property of the Crown wherever found or growing.
II. No private Boat or Vessel is to go to the Coal Harbour or Hunter’s River without a License from the Governor’s Secretary, stating the purpose of such voyage, the Owner or Owners to Bind themselves in 50l. and two Sureties in 25l. each, to observe the following Regulations
III. To take a regular clearance from the Naval Officer.
IV. Those who have permission to get Cedar or Coals to procure them in the place that may be pointed out by the commandant and not to interfere with the People at Public Labour.
V. Not to behave troublesome or riotously to any person whatever belonging to the Settlement, or to disregard any Public Order issued by the Governor in Chief or the Commandant, on pain of the Penalty not only being levied, but the Vessel ordered to depart.
VI. On arriving at the Coal Harbour, no Person whatever is to leave the vessel until the Master has entered the vessel, and has the Commandant’s Permission to load.
VII. Not to use any other than one kind of Basket that will hold about one Hundred Weight of Coals, to measure them in and out of the vessel by.
VIII. To give the Commandant a Daily Account of the coals or timber received, and not to sail without giving the Commandant Two days Notice, and being provided with his Certificate and Letters for the governor.
IX. No Vessel is to leave the harbour between dusk in the evening and day light
X. No boats are to land about the Settlement in any other place than that pointed out by the Commandant
XI. Any Master of a Vessel employing the convicts without the commandant’s permission will subject the Owners to pay the Penalty for each offence
XII. No Spirits whatever are to be given to the Convicts; nor any to be landed but by the Commandant’s Permit
XIII. The Owners of all Vessels frequenting Hunter’s river are, previous to their Clearance being given, to enter into a further Recognizance, themselves in 100l. and two sureties in 25l each, to be recovered by the Naval Officer at this Port, in case any person whatever is taken from hence to that Settlement, or brought from thence hither, without the governor in chief’s or the Commandant’s written permission for the purpose; and it is to be clearly understood, that no excuse of people swimming on board or being secreted will be admitted, as in that case it will be the owner’s interest to direct the master to re land the person found on board at the Settlement he took him or her from.
XIV. On arriving in this Port the Master is to Enter (and that on oath if necessary) the quantity of coals, timber, or other articles they have on board; and previous to their hoisting the Admission Flag Security is to be given for Paying the King’s Dues and Fees as follow viz.
License from the Governor’s Secretary for the Clerk…2/-
Clearance Naval Officer’s Clerk 1/-
Orphan Dues at Sydney as established Oct., 15, 1800
Entrance in the River and Clearance from thence 2/-
Entrance at Sydney, Naval Officer’s Clerk 1/-
King’s Dues for Orphans,
For each ton of coals for home consumption, to be paid to the Naval Officer 2/6-
For each ton exported from the River or from hence 2/6-
For every 1000 feet square of timber for home consumption £3
For every ditto for Exportation £4
Metage per ton on coals to Wharfinger 2/-
Measure of timber per 1000 ft to do 2/-
Mr. James Mileham, Assistant Surgeon, will hold himself in readiness to Embark on board the ‘Lady Nelson’, to take the Duty of the Settlement at the Coal Harbour and Hunter’s River till further orders.
Official Naming of Newcastle
Lieutenant Charles Menzies is sworn in as a Magistrate for the above Settlement and County, which is hereafter to be distinguished by the name of Newcastle in the County of Northumberland, the division between which and the County of Cumberland is to be the Parallel Line of 33 20’ South Latitude.
The Military Establishment ready to embark for Hunter’s River is for the present to consist of a Serjeant and nine Privates of the New South Wales Corps, part to embark on board the Lady Nelson tomorrow; the remainder to go in the Resource
Mr. John Tucker goes also in the Lady Nelson as storekeeper, and Mr. William Knight as Superintendent at the above Settlement, together with several miners.
Sydney Gazette 25 March 1804
Departure from Sydney
On Tuesday His Majesty's Armed Tender Lady Nelson, with Lieutenant Menzies, Commandant of the Settlement,Mr. Mileham
, Surgeon, and Mr. Bauer, Natural Historical Painter on board, got under weigh, with the Colonial vessel Resource, and the James Sloop ; but owing to a North easterly wind setting in were obliged to anchor in Look Out Bay, where they remained until the following morning, when they again weighed and in a short time cleared the Heads.
His Excellency, and Family made an excursion down the Harbour on Tuesday, to witness the departure of the little Fleet, whose destination, it may be hoped will prove immediately advantageous, and lastingly beneficial to this part of His Majesty's Territory, as well from its proximity as its useful natural productions.
The part of the Establishment embarked in the Lady Nelson, were Six Privates of the New South Wales Corps,
Mr John Tucker, Storekeeper, One Overseer of Convicts, And Twenty-two Prisoners, among whom were Two Carpenters, Three Sawyers, a Gardener, and Saltboiler 
Lieut. Menzies at Coal River
Lieutenant Menzies reported his arrival to Governor King in correspondence dated 29th April 1804. When he arrived at Newcastle, previous to entering the Harbour Lieut. Menzies first went in a small boat to examine the situation of the Mines and determine a place most suitable for Settlement. He described what he found - a most delightful valley about a quarter of a mile from the entrance and South Head and close to the Mines. He immediately ordered a disembarkment to take place and began to unload the three vessels.
The next morning he examined Chapman's Island which he found unsuitable for settling or even confinement of the worst of the convicts as they could have waded to the mainland at low tide. He thought Coal Island would be a much better choice for a place of confinement should it be necessary.
Ensign Barralier's 1801 Map showing location of Chapman Island
Lieut. Menzies reported that an excellent mine had been opened although had previously been dug by individuals in a haphazard manner, having never left proper supports and leaving them to fall in any way. He thought that another fifty convicts could be worked to great advantage and they could be managed by the Military Establishment already in place. Provision for the convicts were issued only twice a week so that they would have very little sustenance should they escape to the bush. A four Pounder was promised by Governor King as well as six stand of Black Arms. Bunting for the camp was also sent.
Governor King's Concerns
In response to the concerns of Governor King, Lieutenant Menzies informed King of the arrangements he had made should convicts from Castle Hill attempt to liberate prisoners at the Coal River - In the first place I shall have timely notice of their approach from the numerous Natives with whom we are on the most friendly terms. The plan I should pursue would be immediately to place the whole of the convicts upon Coal Island before we beat to Arms or gave any Alarm order any vessel that may be in the harbour out; I could then muster twenty six armed men all of whom I may safely put confidence in and I think with that number I should be able to give Your Excellency a good account of the Delinquents.
The Storekeeper, Overseer and soldiers had requested that their wives and families should join them at the River and the Governor replied that as many of the women as the Edwin could carry would be sent and the remainder were to go by the Resource
In May Lieutenant Menzies was informed by Gov. King that twenty Englishmen who had recently arrived would be sent to the river (The most recent convict ship to arrive from England was the Coromandel) - I am sorry to say that their conduct on board the Ship they came out in was none of the best, still they are not of a worse cast than people of that description generally are and by mixing them with the Irish you have, I promised myself less evil will arrive that if they were all Irish. Two salt pans were forwarded. Mr. William Douglass who had been an officer in the Navy was sent to the settlement and was to assist Lieutenant Menzies in any way he thought best.
Progress of the Settlement
By November 1804 Menzies could report that a well-built stone wharf was nearly completed, Length one hundred and eighty six feet, breadth thirteen feet depth of water at high water eight feet two inches and at low water two feet. Bricks had been sent from headquarters to aid in the construction of salt pans, however boat builder/ carpenter Thomas Crump had become ill and so the work had been delayed. Mining too would cease unless oil was sent from headquarters as the supply had nearly run out. Fustic had been discovered at the Hunter River, a quantity was sent to Sydney by the Resource in 1804.  (Fustic was a wood which made the finest yellow dye - The Present Picture of New South Wales by David Dickinson Mann).
A Military Officer's Barrack had been finished by November and a strong guard house which was shingled and had a room for the non-commissioned officers and (ominously) a black hole.
The Return for the settlement in July revealed details of all those at Coal River at that time
1 Marine belonging to H.M.S. Buffalo;
2 Non-Commissioned Officers;
3 Overseers who were prisoners;
51 male prisoners;
9 female prisoners and 10 children.
Two men were on the sick list.
Curiously there is no Commanding officer listed.
Botanist Robert Brown
Botanist Robert Brown came to the Coal River on the Resource in 1804. Browne was given a boat by Governor King for his own use while there and supplied with arms and ammunition which was fortunate as he was attacked by Natives while up the North Branch of the river. Menzies was instructed to give Robert Brown every assistance including victualling for Brown and servant from the government stores. Robert Brown had been appointed at the age of twenty-six years to the scientific staff on H.M.S. Investigator for exploring voyages. After the condemnation of the Investigator in 1803, Brown devoted his attention to botanical research in the districts surrounding the various settlements in NSW and Tasmania. He sailed for England on the 23rd May 1805 on board the refitted Investigator.
Ensign Cressy of the NSW Corps took over Command of the settlement in a brief absence of Lieutenant Menzies in July 1804 until September 1804. There was a great deal of animosity between the two when Menzies returned, however Menzies remained Commandant until March 1805
Late in February 1805 the Francis, Mr. Edwards, master, came into Sydney from Newcastle bringing passengers Lieut. Menzies and surgeon Charles Throsby and also eight tons of coal and five tons of excellent salt - The very capital saltpan at King’s Town was erected in less than a fortnight within a few feet of an excellent coalmine from whence it is supplied with fuel and the water not exceeding four feet from its front. The prodigious utility of that and others sent out by Government, which is to be erected here will be generally felt as has the scarcity of salt hitherto severely been.  (The salt pans arrived in the colony on the Coromandel in 1804)
Resignation of Lieut. Menzies
Within a fortnight it was announced that Lieutenant Menzies had resigned......
Lieutenant Menzies to Governor King, 15th March 1805.
Sydney, New South Wales, 15th March 1805.
Sir, When I volunteered my services and accepted the command of the settlement at Newcastle, it was at a time when no officer could be detached from head quarters, shortly after the late insurrection took place, and when the exigency of the service required an establishment immediately to be formed for the reception of the most troublesome United Irishmen, in order to separate them from their villainous advisers and connexions; but the colony having long since been restored to a state of perfect tranquillity and good order, and fearful that my remaining in this country any longer would interfere with my rank in the Army, I have to request that your Excellency will be pleased to permit me to resign the command of that district and return to England to my duty in the Royal Marines; and I hope my conduct during the whole of the time I have had the honor to be under your command has been actuated with a zeal for the interests and prosperity of this colony, and happy shall I feel myself if my exertions have in the smallest degree contributed to preserve that subordination so essentially necessary for the welfare of every well regulated Government - more particularly this. Permit me to return my sincere and heartfelt acknowledgements for the uniform protection and support which I have always received from your Excellency's in the execution of my duty, and which will ever be remembered by me with the most lively sense of esteem and gratitude for your Excellency's exalted character. I have etc., C.A.F.N. Menzies, Lieut. Royal Marines
. - '
In March 1805 Ensign Draffen of the NSW Corps was appointed to the position of Commandant at Newcastle. He was given a detailed of Instructions by Governor King, however did not remain in the role very long as he became incapacitated with illness leaving Charles Throsby to take over command of the settlement.
1). Lieutenant Menzies departed England in April 1803 on the Calcutta, under Captain Woodriff.
2). Captain Daniel Woodriff was a British naval officer who first came to Australia in 1792 in command of the small convict and supply ship Kitty. In 1803 he was in command of HMS Calcutta, escorting David Collins on his expedition to establish a settlement at Port Phillip Bay.
Feb. 24 1842. At Greenwich Hospital, aged 86, Daniel Woodriff, esq. Post Captain K.N. a Captain of the Royal Hospital, and C.B. He entered the Royal Nary in 1762, but was educated on shore in 1767-70; he was made Lieutenant in 1789, a Commander in 1795, and superintendent of the prisoners of war at Norman Cross in the same year, and attained the rank of Post Captain in 1802. Towards the end of the latter year he was appointed to the Calcutta 50, then fitting out for the purpose of establishing a new convict settlement at Port Philip, on the southern extremity of New Holland. He sailed at the end of April 1803, and arrived at the place of his destination on the 12th Oct. following; but finding the spot not-desirable, on many accounts, he proceeded to the river Derwent, where he founded the now flourishing town of Hobart. Alter her return from New South Wales, the Calcutta was fitted for sea an effective 50-gun ship, and tent to St. Helena for the protection of merchantmen. Whilst on this service she was captured, after a gallant defence, by a numerous French squadron; and Capt. Woodriff, after three months confinement on board the French fleet, was carried prisoner to Verdun. After several fruitless applications for his release, about June 1807, he received an order, signed by Bonaparte, then in Poland, directing him to proceed immediately to England, and to take the route of St. Maloes, a town which no Englishman was at that time permitted to enter except himself. On his arrival there he found that all his letters, directed to him at Verdun, had been forwarded from the latter place by order of the French government; and on his proceeding to engage a vessel to convey him to England, for which he expected to pay forty or fifty guineas, he was told that one was already provided for him, free of expense. At this period, it is to be remarked that, owing to some difficulty, there was not an exchange of prisoners of war but the British government, not to be outdone in generosity, immediately released a French officer of similar rank to Capt. Woodriff, and sent him to France on terms of equal liberality. At a Court Martial, held shortly after, he was honourably acquitted, of the loss of his ship; and his conduct pronounced to have been that of "a brave, cool, and intrepid officer." Capt. Woodriff had the improvement of the service always in view; and made some valuable suggestions to the Admiralty and Navy Boards. At the close of the year 1808 he was appointed agent for prisoners of war at Gosport, and in 1813 Commissioner of the Navy at Port Royal yard. Towards the latter part of the war he resided as Commissioner at Jamaica. In 1830 he was appointed a Captain of Greenwich Hospital and was nominated a Companion of the Bath in the following year. One of his sons it a Commander, and another a Lieutenant R.N. His eldest daughter married the late Lieut.-Col. Tomkins, of the 58th regt. and died in 1820. - Gentleman's Magazine
3). Private Archibald Scrobie was on the return of Marines employed at the river