This dip circle or inclinometer almost certainly came from the Parramatta Observatory where it was used for studying the Earth's magnetic field. It is listed in the 1825 and 1847 lists of Parramatta instruments as well as being mentioned in research papers on magnetism by observatory staff.
A dip circle measures the inclination of the Earth's magnetic field compared with the horizontal. In contrast a magnetic compass points horizontally, but the magnetic field is only horizontal at the equator. The higher the latitude the more magnetic field points downwards. Dip circles were used in surveying, mining and studying the Earth's magnetic field. For accurate readings the instrument had to be carefully constructed. Henri Prudence Gambey was the best known French maker of geomagnetic instruments. Accordingly, this instrument is carefully made with attention to the reduction of friction in the pivoting of the magnetic needle: on depressing a lever, the needle pivots on a pair of jewels on either side to reduce friction.
Dr Nick Lomb,
Curator of Astronomy, April 2009