Lae was declared a town under the New Guinea Boundaries Ordinance on 31 March 1931 at the height of the gold rush era and Lae became the prototype for New Guinean towns built up around airstrips. The Europeans lived to the East of Lae Airfield while the New Guineans lived to the West. Cargo arrived in Lae and then was transported by air to the goldfields in Wau.

In July 1937, Lae made world news when American aviator