Colin speaks out against alcohol after a teenager is found drunk. The bootleggers in turn set light to the church. At the same time, Grady Hocking and his two sons, George and Greg, have come to town.
Matt and Oliver become lost in the desert while returning to Paterson's Ridge from buying stock. Matt accepts the help of an Aboriginal and his wife, but Oliver refuses.
Poor railroad workers live in deplorable conditions, and Kathleen sets out to help them and their families.
Victoria returns from England with her fiancé, Baron Hugh Trevalyan, in tow.
However, friction is caused in the Blackwood house when it emerges that Hugh is not as gallant as he seems.
Meanwhile, Rob takes on a contract to supply the British army with wild horses and it proves to be a difficult challenge.
An old fighter, Dandy Jim O'Rourke, comes to Paterson's Ridge eager to fight Matt. Despite Matt's reservations, he agrees to O'Rourke's demands. Meanwhile, Julius Waugh, a talented pianist arrives in town but he has more on his mind than a recital.
The drought torments Paterson's Ridge, and a drifter arrives and offers to help Kathleen find an underground well. Matt is suspicious of the drifter, whose name is James. As it turns out, James was recently released from prison and is eager to make a new, clean life for himself, but his brother, Stacey, forces him back into a life of crime.
In Melbourne, Matt defends the struggling, poverty-stricken farmers of Paterson's Ridge and Kathleen is eager to lend a helping hand.
However, tragedy strikes en-route to Melbourne when a government employee tries to prevent Kathleen from delivering some vital documents. Emily suffers a great loss when the train she and Kathleen are travelling on is de-railed.
A woman named Joanna is looking for her vagabond father and enlists Matt's help. Some tension rises between Joanna and Kathleen because Kathleen feels that Joanna is attracted to Matt. What Joanna and Matt do discover is that Joanna's father is dead, but he married a second time, and somehow out there is his young son, Joanna's half-brother. Joanna must find him now
Joanna and Kathleen go on a quest to find Joanna's half-brother. When they do find him, they discover that his adoptive father is abusive. Joanna and Kathleen take Joanna's half-brother, away from the violent man, along with the man's helpless wife and his small daughter.
While going to fish one day, Colin and Rob discover the stagecoach, which tumbled down a cliff. The only survivors are a woman and a baby. The woman, Ruth Whitney, claims that the baby is not hers, but nobody in Paterson's Ridge believes her. Finally, Matt finds the baby's real mother, but only after Emily decides she wants to adopt the baby and to call him Jeremy.
Edward Dengate is the new constable in Paterson's Ridge, which he hates because he would rather be a farmer. Matt convinces Edward's father that he cannot choose his son's life for him, and Edward leaves to fulfill his dream.
The British army comes to town and attempts to recruit the locals using some dubious methods. Much to Matt's dismay, Rob is tempted to enlist. However, Rob finds himself conflicted about leaving because of his growing feelings for Ruth.
The notorious Reilly gang turns up in Paterson's Ridge in an attempt to evade being captured by the state troopers.
While Matt and Rob are away mustering, the Reillys arrive at Langara and take Colin, Emily and Danni captive.
After they read a negative article about themselves and their bank robbing exploits in the local press, the brothers decide to make Kathleen print a story from their point of view.
The Blackwood family feels threatened when Ruth plans to write a series of articles on the town's history and Frank goes to extreme measures to keep his convict links hidden. Meanwhile, Ruth's success using the pseudonym Jack Albright results in international recognition and she is offered a job in the United States.
Tensions rise in Paterson's Ridge when a Koorie woman, Lizzie, and her son, Sam, come to town. Racist attitudes are exacerbated when livestock are found killed with a spear. Lizzie is eager for Sam to receive a formal education but he is torn between going to school and exploring his Aboriginal heritage.
Aeronaut Henry Faulkner makes an emergency landing in Paterson's Ridge and causes quite a stir. Matt is especially jealous of the friendship Henry strikes up with Kathleen. Michael is impressed by Henry's flying plans and is inspired to experiment on his own, much to the concern of his family and friends.
Kathleen publishes an article that suggests political corruption is responsible for some very successful landownership sales in the area. The source of her information is a Member of Parliament who wishes to remain anonymous. Meanwhile, the Premier requests that Matt investigate possible cases of corruption on the land committee. When Kathleen's article is published, she finds herself at loggerheads with Matt as its publication suggests that Matt is the one who leaked the story. When she refuses to reveal her real source, she faces some tough questions from the government and a possible prison sentence.
The town's lumber mill is in dire financial straights and the owner dies after being confronted by a disgruntled employee. When the mill owner's son, John Archer, takes over, he struggles to make the business viable and fails to bond with the employees who feel over worked and exploited. As they are required to work longer hours for very little pay, the employees threaten to resign. Only winning a major contract, supplying lumber for the state railroad, will prevent the business from going bankrupt.
Religious conflict occurs in Paterson's Ridge when a Jewish, Russian family moves to the town. They are haunted by their painful past and find adapting to life in a Christian community difficult. Meanwhile, the town pulls together to build a new church but the theft of the sacred cross ruins the jovial atmosphere.