The Sydney Morning Herald began its remarkable journey on this day 185 years ago in the midst of  gale-force winds and a spectacular thunderstorm that waxed and waned for three days.

House walls collapsed, cellars flooded and unpaved streets washed down to the underlying rock.

Lightning destroyed the tip of the signal station on South Head and not far out to sea the sailing ship York lost its foretopmast to another bolt and it was all hands on deck as it made a run for the safety of Sydney Harbour.

At the Sydney Herald office, a squat two-storey stone warehouse in Lower George Street, the three 20-something proprietors – William McGarvie, Ward Stephens and Frederick Michael Stokes – must have been cursing their luck. They'd opened for business less than three months before as commercial printers, but their trade had dropped to a trickle when rival printers slashed their prices. Starting a weekly newspaper seemed their only chance of survival. They quickly canvassed potential subscribers, editorial contributors and advertisers and gathered local news. Fortunately a convict ship had arrived days earlier and the English news was only four months old. The Reverend John McGarvie, a Presbyterian minister and elder brother of one of the proprietors, was enlisted to write the editorials – none of the partners were journalists – and reliable contacts set up for market prices, shipping information and weather records. They set a target of 600 subscribers, and priced the paper below their competitors.

Now, with hours of backbreaking work on their hand-operated Columbian press ahead, the skies had opened. Oil lamps scattered around the press room were weak and flickering. Someone rushed out in the rain to beg more lamps and candles from a home across the street, coming back with an armful and a borrowed small boy to hold a light over the press.

It was well into Monday morning before they finished printing, with a stop to get in some late news gleaned from a brig that had arrived from Hobart the day before. Quagmire roads meant home deliveries weren't completed until the next day.

The accidental newspapermen needn't have worried. The Sydney Herald – it wasn't renamed The Sydney Morning Herald until 1842 – was a tearaway success. The following Monday the paper reported that "the astonishing number" of 700 subscribers had signed up. By issue three the figure was 750, "considerably more than any other Sydney journal".

The secret of its success wasn't hard to find. The abusive, mud-slinging, barrow-pushing of Sydney Town's three established newspapers – the Sydney Gazette, the Australian and the Monitor – had worn down much of the go-ahead citizenry.

The new paper had no axe to grind, but it was armed with two mottoes that promised much for subscribers and advertisers. One – "In moderation placing all my glory, while Tories call me Whig, and Whigs a Tory" – appeared at the top of page one, and the second – "Sworn to no master, of no sect am I" – was published over the inside editorial.

The editorial, taking up more than half a page, had pledges that were more down-to-earth, most of them strikingly in line with the views held by the Herald of today: "Our editorial arrangements will be conducted upon principles of candour, honesty and honour" and "Whilst we are bound to respect government and its measures, we are entitled to be independent in thought and speech." The news appeared in smaller type on inside pages – page one of the four pages was classified advertising.

That first Herald could not have come at a better time. The colony was about to experience the greatest period of expansion and prosperity since the arrival of the First Fleet 43 years before. The flow of free settlers was on the rise from a troubled England, and the patronage-ridden land-grant system was replaced by open-market, fixed-reserve auctions, with the money used to boost immigration. Exports of wool and whale oil and other commodities were booming. And colonial government revenue was soaring with duties collected on taxable items, with alcohol and tobacco, as always, at the top of the list. The first steam boats were about to start chugging around the harbour and about 100 oil-lit street lamps were in place. Between the first census of 1828 and the next in 1833 the population of Sydney and district grew from 10,815 to 16,232.  The Herald prospered, too. As the favoured newspaper of merchants and shopkeepers, and their well-heeled customers, its advertising columns blew out. It went twice-weekly in 1832, tri-weekly in 1838, and daily on October 1, 1840.

During its 10-year "founding era", the Herald's news reporting, locally contributed pieces on agriculture and science and other practical topics, and its editorials – particularly those pointing out defects in the convict and prisoner detention systems, the need for an elected Legislative Assembly in place of the government-nominated Legislative Council, and on the workings of the courts – stand the test of time.

But in 1838, when up to 30 Aboriginal men, women and children were massacred by white stockmen at Myall Creek, near Inverell, came one of the most regretted stains on the Herald's history. For some time there had been clashes between the two cultures, with killings on both sides as more and more traditional Aboriginal land was taken up by white settlers. The Herald strongly supported the widely held view that the settlers were justified in taking the law into their own hands with revenge attacks because police were doing nothing to track down Aborigines behind a series of brutal raids on homesteads. During the Myall Creek murder trial, the Herald repeatedly and improperly attempted to sway the judge and jury not to be "excited in favour of the murderous cannibals of New Holland". However, seven of the attackers were hanged.

One by one the three founders decided newspapering was not for them. McGarvie lasted only five weeks and went back to his bookshop. Stephens and Stokes had a falling out and Stokes sold out in  1836. But he was back in December 1839, when Stephens decided to work his land holdings in the Upper Hunter. On February 8, 1841, an exhausted Stokes sold out. The new owners were the printer, journalist and editor John Fairfax and Charles Kemp, a journalist hired in 1838 when the Legislative Council was opened to the press.

Editorially the new Herald quickly showed that it was in the business of progress and improvement, poring over up to 10 years of official reports and statistics to show how the colony's trade had grown, that the reformed land system worked, that the immigration levy was transforming the country and that the findings of a British parliamentary inquiry that the colony was morally bankrupt was a calumny.

It was also heavily into infrastructure before the word was invented. After a fierce April storm in 1841, the paper raised the spectre of plague because there was no proper sewerage system to handle the "slops and ordure daily and hourly cast upon the surface of the ground", the risk of wholesale building collapses because there were no regulations to control shoddy speculators – "these sordid worshippers of the golden calf" – and was scathing about the damage to roads and footpaths which had not been properly maintained. The Herald pushed for action: "This affluent metropolis ought long ago to have had the rights and privileges of an incorporated borough." The Herald got its wish in 1842 when Sydney was declared a city, but as the citizens prepared to elect 24 aldermen it became nervous. It had serious concerns about the "mental and moral qualification" of some of those standing, and feared that through apathy or selfishness not enough of the "respectable classes" would vote, leaving "the city in the hands of the working classes". John Fairfax, who came to Australia with his family in 1838, had seen the violence of the machine-breakers and the reform riots. A Herald editorial warned: "Their silly speeches, their violations of the pure mother-tongue, their meddling nonsense, their gross ignorance, their fiery outbreaks of bad temper, their breaches of good manners, their coarse allusions, their personal insolence, their pugnacious provocations, will all be sharply watched, will all be faithfully reported to the reading public." But within a few days of the election it was rejoicing. The official results showed "a majority of competent men" had been elected. 
The new owners took a more sympathetic view on Aborigines: "We ... hold that the blacks have an indefeasible right to follow their own customs and be governed by their own laws, so long as they do not infringe on the great principles of international law, applicable to all people and all nations."

News walked in the door. In 1841 Caroline Chisholm, after steeling herself by pacing back and forth outside the Herald building, won John  Fairfax's backing for her campaign to protect female immigrants from sexual and workplace exploitation. And in 1846 the explorer Ludwig Leichhardt marched from the docks to the Herald office and dictated a two-page exclusive on his discoveries that would open up the nation's far  north.

With plentiful public meetings, often made hazardous by thrown objects, and full access to the courts and parliamentary sittings,  the Herald's journal of record reputation came into full play, with a page or more given over to near-verbatim reports. They often came with sound effects – "Great uproar and confusion", "Cheers, groans and a fight".

But for much of the 1840s the dark cloud of a major depression crippled the colony. Businesses and individuals poured through the bankruptcy courts and unemployed labourers roamed the streets. There was no market for beef, wool prices tumbled and sheep were boiled down for tallow.  The land boom went bust.

John Fairfax and Charles Kemp had to batten down the hatches. The Herald, now selling 3100 copies a day, struck a pay-cut deal with its 60-strong workforce to avoid job cuts and lifted advertising and subscription charges.  By the end of the decade it was the only Sydney newspaper left standing.

The discovery of payable gold at Ophir, near Bathurst, was revealed on May 2, 1851 and brought a dramatic reversal of fortunes. The news was a Herald scoop, but tucked away near the bottom of page 2. "It is no secret that gold has been found in the earth in several places in the western country," it began. It had been secret though, at least to the public, as the government worked out how it would handle the pandemonium that was to come.

There was a touch of "shock, horror, terror" to the Herald's initial editorial line. It cautioned: "Should our gold be abundant in quantity, rich in quality and easy of access, let the inhabitants of  NSW and the neighbouring colonies stand prepared for calamities far more terrible than earthquakes or pestilence." It must have seemed that way as shops were left with no staff and no customers, ship crews deserted, old men got out of their rocking chairs and on foot and on horseback headed for the diggings.

In one of its first commitments to on-the-ground investigative reporting, the Herald sent off a "special correspondent", Gideon S. Lang. His first report began: "I reached Bathurst on Saturday, and found the gold scene still more violent than in Sydney, and much more increased by the arrival of a man with a piece of gold, three-and-a-half pounds weight, which he turned up as he says, like a root of potatoes. It had such an effect upon him that he commenced filling his pockets with stones, thinking it all gold, and today even has not recovered so far as to be able to eat." The Herald didn't need to go anywhere – the gold came to it in a river of classified advertising as the colony prospered, and the proprietors became rich men. On September 30, 1853, the 137-year reign of the Fairfax family began when Charles Kemp decided it was time to enjoy the good life and sold out to his partner. John Fairfax celebrated by buying Australia's first steam-powered press and hiring more journalists. And, with the change of ownership, two of his sons, Charles and James, became partners. By 1854 it was able to boast that it was selling 6620 copies, a circulation higher than 10 of the 12 London dailies.

Time has built an image of the founder of the Fairfax dynasty as a venerable, white-bearded, frock-coated, Bible-bound ancient. But he was still in his 30s when he became co-owner of the Herald in 1841, and in his 40s when he became sole proprietor. He knew how to print the paper, run its finances and edit if needed. And, with the Reverend John West in place as the paper's first official editor from 1854, he set out to make a good newspaper great, with quality journalism as the weapon.

To go closely through the Herald of his first 10 years is to see all the touchstones that made it Australia's leading masthead then and now – news and investigative reporting, analysis, and feature writing. And the team that came together to do it suggests the eclectic mix of a modern editorial team: a Congregational minister (West, author of the first forensic examination of the merits of Federation); an erudite columnist given to drink (Richard Rowe writing as "Peter Possum"); a woman who loved writing about nature (Louisa Atkinson); another woman who loved the thrill of being a foreign correspondent (Anna Blackwell writing from Paris); unnamed "special correspondents" doing undercover investigations (a 10-part look at the city's impoverished underbelly was one). Reporters were rushed to the scene of upheavals (the gold rush) or disasters (the Herald brought out a special afternoon edition after 121 passengers and crew drowned in the wreck of the Dunbar in 1857).

When John Fairfax died in 1877 his successor, James, had been trained in every aspect of the business. All the ingredients that were to underpin the Herald's future – quality journalism, dominance of the classified advertising market, high circulation, up-to-date technology, and a family line of succession – were in place.

James Reading Fairfax had learnt much from his father and from on-the-job experience that began in 1852. He was to see the Herald through Federation and three wars: Sudan (a NSW contingent was sent largely at the Herald's urging); the Boer war (covered by A. B. "Banjo" Paterson) and World War I (official correspondents only – but ex-Herald man Charles Bean was there). Like his father, James kept the Herald up to date with the best printing machinery and a wary eye on his rivals, dropping the price to one penny in 1893 to match the strong-selling Daily Telegraph.

James Fairfax died in 1919. But two deaths in the third generation – his sons James Oswald Fairfax (director) in 1928, and Geoffrey Evan Fairfax (managing director) in 1930 – as well as the general manager W. G. Conley in 1929, left a sudden void at the top. In March 1930, J. O. Fairfax's son, Warwick Oswald Fairfax, 28, stepped in as managing director.

The Herald had soared with expansive coverage of the big events – Federation, the US Great White Fleet, the war, the depression and the fiscal revolt by NSW premier Jack Lang and his dismissal. Its circulation rose from about 70,000 at the end of the century to 220,000 on its 100th birthday in 1931.

By the 1930s a world-wide drift to the more populist but well-edited tabloids was under way. The Daily Telegraph had degenerated into a pastiche called the Daily Pictorial, but in March 1936 it was back under its old masthead and new owners – one was a newspaper newcomer called Frank Packer. It was an appealing mix of both serious and entertaining news. Some fast footwork was needed from the Herald, but this was a big ask. According to Gavin Souter's Company of Heralds the editor was 77, his associate editor was 60, the chief subeditor was 67 and so was the chief of the reporting staff. There was an influx of 20- and 30-something talent, but one of the biggest problems – the arm-stretching size of the paper – wasn't addressed until October 1941, with a trim rather than a haircut. By then war was under way and despite an outstanding coverage by 23 Herald war correspondents and the appearance of news on page one on April 15, 1944,  circulation of the voluminous Herald was hit by newsprint rationing. By war's end the slimmer, breezier Daily Telegraph began to outsell the Herald.

In 1953, after a rare period when the Herald had overtaken Telegraph sales, Warwick Fairfax spoke proudly to staff about the paper's ability to "keep up with the times". "But, as you know", he added, "capacity to win popular favour is not the only test we apply. On the contrary, it is one which on some occasions we may deliberately have to renounce." John Douglas Pringle, about to move into the editor's chair, was present, and would have wondered what those occasions would be. The circulation decline continued as some of Australia's top journalists tried to work miracles with little space and a refusal by management to allow issues such as abortion, homosexuality and the Vietnam War to be debated. In 1977 Warwick Fairfax was replaced by his son James in a boardroom revolt.

A new senior editorial team was appointed in 1980 and the Herald took on a different feel: pacey news and features, read-me headlines, big photographs, expanded sport and business sections, and well-designed daily liftouts. In 1984 a high-quality weekly colour magazine was introduced and the Herald slowly began to rally. By the end of the decade Saturday's paper was often selling more than 400,000 copies, with a lift in readers aged 18 to 34.

But there was upheaval within. On Monday December 7, 1987, a mixed entourage of merchant bankers and public relations men entered the Herald building in Broadway with a shy, almost gawky 26-year-old: Warwick Geoffrey Oswald Fairfax, another of Sir Warwick's sons. Young Warwick had persisted in what was to be a $2 billion takeover despite a worldwide sharemarket collapse in October. He had also listened to his advisers that the newer, more "out there" Herald was a grave departure from tradition, that the journalists had taken over – or, less kindly, that "the lunatics were running the asylum". Plans to appoint new editors sparked the resignation in February 1988 of a core of editors and senior writers. Staff journalists walked out in support, but there was no consternation when the resigned editors worked on to preserve the Herald's unbroken record of publication.

On December 10, 1990, when desperate refinancing moves failed, what remained of the company was placed in receivership and, after five generations, the last Fairfax proprietor left the building.  Working with an advisory panel of mostly pre-Warwick managers and the key editors, the receiver signalled "business as usual", but not without a series of cost cuts that were to become a familiar pattern.

A Canadian newspaper proprietor, Conrad Black, gained  management control of the company on December 16, 1991. Black left in 1996 when the federal government refused to let him take a controlling interest, and the company rolled.

There was some frisson in 2007 when John Brehmer Fairfax, the son of Sir Warwick's cousin Sir Vincent, rejoined as a director after a merger with his family's Rural Press empire. A son, Nicholas, also joined the board. But the Fairfax rebound ended in 2011 with the sale of the family shareholding.

The award-winning journalism continued unabated, particularly its crusade against corruption, fraud, deceit and neglect in high places.

And, almost without fuss, the first issue of a new Herald appeared on the afternoon of April 25, 1995. This time it was produced by just two people on a computer terminal. It took about five minutes for the page to download but when it did there was a Eureka moment – smh.com.au was born.

The editor of the paper's computer section, Tony Sarno, remembers looking at Trish Murphy, the subeditor who'd worked with him on the project, and then yelling across the Herald's print newsroom: "We're live across the world! We're live across the world!" "Across the world was the big deal, not that we were live," he says of that day.  "The Herald had become a global newspaper. I felt that we were suddenly on the same footing as the New York Times". How did the print newsroom take it? "I think most people yawned." The page was a recast of the paper's computer section of three days before. But it made the Herald the first Australian newspaper to put up live content edited by journalists. Despite a good reception from a growing band of online users, the company took it a step at a time. In September the entertainment listings section Metro – now The Shortlist – went live. In February 1996 came coverage of a federal election, with photo spreads, graphics, an "E-letters to the editor" option and a significant first: stories that had not appeared in the print newspaper. By the following month the launch of a daily news page with national, world, business, sport, editorials and columns made it the most comprehensive of Australian news sites.

The inevitable came in 1998 when the site broke free from the print Herald and began running breaking news. And with the broadband revolution of the millennium, smh.com.au soared.

Latest figures show the Herald is the most widely read newspaper masthead in Australia.

The industry's own measure, EMMA, which includes print and digital, gives the Herald a monthly audience of 5.9 million, more than 1 million ahead of its nearest rival, Sydney's Daily Telegraph. The new digital-only Nielsen ratings give smh.com.au a monthly audience of 4.7 million, more than 1.7 million ahead of the next digital masthead, Guardian Australia.

For the record, the rebirth of the Herald in 1995 came on a perfect Sydney autumn day, with a temperature that didn't go above 20 degrees, and no sign of rain.

Max Prisk has worked as journalist for more than 40 years. He was editor of the Herald from 1988 to 1993.