Governor Lachlan Macquarie recognized the need for a road from Sydney to South Head, partly for defence concerns, and partly to access the signal station and the planned lighthouse.
Macquarie had this road built in 1811, using convict and military labour, on a track first cut in 1803. Current Oxford Street formed part of this road and was previously known as South Head Road. This was the first 'rural road' that Macquarie ordered to be built: the area round the lighthouse, completed in 1816, was almost uninhabited bush for the first half of the nineteenth century.
To pay for these road constructions and subsequent maintenance, toll gates were built at the points where the roads entered the town. Tolls were collected for the remuneration of the private contractors who had built the roads.
Over time, as the city expanded, the toll gates moved outwards. The one originally at the beginning of current Oxford Street (at Hyde Park), was later moved out near the Victoria Barracks.
The toll gates were located here from 1848 until 1877.