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Some parallels with the American constitutional system are obviousenough. Both systems are rigid , based upon written provisions.In both systems the drafting history is well-known or capable ofbeing known. Both allot specific powers to the federal government,leaving the residue to the States. Both entail dubious reliance onthe separation of judicial from other powers.3 Both systems byallotting power over defence and commerce beyond the limits of aState to the federal authority have required difficult determinationsas to the scope of these concepts.4 In both systems these par-ticular determinations have acquired crucial importance in ourpresent century, marked as it is as regards defence, by the expand-ing techniques of total war, and as regards commerce, by theintractable complexity of economic relations. And in both systemsthese and other judicial determinations of governmental power areraised to the level of momentous statecraft by the difficulty of con-stitutional amendment, which experience in both countries hasshown to reach almost the point of political impossibility.Comparison need not here be taken beyond the purpose ofthis paper; and, within the same limits there are of course majordifferences to be noted. Two of these, perhaps, are outstanding.On the side of political structure, Australia models herself onwas also referred to inconclusively in the Bank Nationalisation Case, (1948) 76C. L.R. 1.

The Australian Constitution, however, does not involve the general doctrineof the separation of powers as known in the United States. Australian problemsin this regard have arisen mainly from the requirement in S. 72 of the Constitutionthat judges shall have life tenure. In Waterside Workers' Federation of Australiav. Alexander, (1918) 25 C.L.R. 425, it was held that the Commonwealth Arbi-tration Court, as then organised, was not a Court , since the President of theCourt had no life tenure as prescribed by S. 72 of the Commonwealth Constitution.The result of this finding was that the Arbitration Court's functions were heldnot to be judicial, and therefore its awards, though valid, could not be enforcedby it. The tenure on the Arbitration Court was subsequently placed on a lifebasis.

For the relevant provisions so far as the commerce power is concerned, seeinfra pp 460-61. Under S. 128 of the Commonwealth Constitution, any proposed alteration

of the Constitution must be passed by both Houses of the Commonwealth Parlia-ment, and then submitted to a popular referendum. At the referendum, the pro-posal to be carried must be approved not only by an over-all majority of theelectors, but also by a majority of the electors in a majority of the States. Upto the time of writing, twenty-three different proposals for constitutional amend-ment have been presented to popular referendum, and only four of these havebeen carried, of which latter only three, The Financial Agreement of 1927 The StatesDebts Referendum of 1928 p. 478 and n. 84, and The Social Services Referendum of1946, can be regarded as being of substantial importance.

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For instance despite our assumption in Australia that wealready have a mass of judicial decisions on the Constitution, infadt, as compared with the American, our Constitution is still com-paratively unexplored. This not only arises from differences in con-stitutional and economic maturity, but from the absence in Aus-tralia of an explicit Bill of Rights. For, though the absence of abill of fundamental rights does not prevent judicial importation offundamental rights into the Constitution it does affect the tendencyof individuals and of corporations to vindicate their rights by con-stitutional attack-the turnover, as it were, of constitutional busi-ness

Furthermore, and in part consequentially, the Australian HighCourt has not as yet been subjected to the ordeal undergone by theUnited States Supreme Court, of adjusting lines of decision set innineteenth century social and economic contexts, to the radicallydifferent contexts of the twentieth mid-century. In the absence ofthis ordeal, it may not be disrespectful to observe that the Court

5Turnover of such business is, of course also affected by the available pro-cedures of challenge.The High Court declined comparatively early to entertain proceedings by wayof a request for advisory opinions, analogous to those entertained under theCanadian Federal system. The High Court attitude in this regard stemmed fromthe very limited separation of powers under the Commonwealth Constitution andthe view that the essential function of the Judiciary was the decision of mattersinter partes and not the consideration of legal questions in abstracto. n reJudiciary and Navigation Acts, 1921) 29 C. L. R. 257. Some breaking down ofthe rigidity of this view has followed on the increasing recourse since, Dyson v.Attorney-General, 1911) K.B. 410 to the Equity jurisdiction for the pro-tection of public interest by way of declaratory judgment against the Crown asrepresented by the Attorney-General, and by way of a suit for injunction in whichthe Attorney-General, as guardian of the public interest, is plaintiff. The testof what is the public interest is rather obscure, though it has been indicated byStarke J in Ramsay v. Aberfoyle Manufacturing Company, 1935) 54 C.L.R. 230at 249, that the Attorney-General might properly be interested in such functionsas the maintenance of safety, sanitary or food regulations, the despoiling of publicrecreation grounds, or the infringement of by-laws.

The declaratory judgment has had striking use in recent Australian consti-tutional cases, notably in the Potato Case Tasmania v. Victoria, 1935) 52 C. L. R.157) where one state sued another, and in the Pharmaceutical Benefits CaseAttorney-General for Victoria v. Commonwealth, 1946) 71 C. L. R. 237), wherethe Attorney-General for Victoria intervened at the relation of a number ofindividual doctors, the Attorney-General being in fact the mouthpiece of themedical profession in its opposition to the Act in question. In the PharmaceuticalBenefits Case the declaratory judgment was granted to restrain the Commonwealthfrom giving effect to the Act, even before it was proclaimed. In the Bank Nation-alisation Act, injunctions were granted restraining the Commonwealth Governmentand its officers, although no action had in fact been taken to give effect to theAct in question.

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amendment, is obviously different toto oelo from that of the Houseof Lords as the final resort under a flexible constitution where thelegislative power is unlimited. In the third place, the Privy Councilis the only resort of appeal from the High Court on matters thatare appealable, and the Privy Council, which has more experienceof interpreting written constitutions than the High Court of Aus-tralia, does not regard itself as bound by its own decisions. Bothon formal and on substantial grounds, therefore, it is curious thatthe High Court should spurn the example of the Privy Council andfollow that of the House of Lords.

Certain other features of this judicial mental pattern wouldstrike American lawyers by comparison with the United States Su-preme Court. One is the refusal of the High Court to permit refer-ence to the legislative travaux prdparatoires, ven in constitutionalquestions. 2 This again is an unquestioning extension of English

12' This refusal is all the more striking because the first High Court benchwas quite prepared to allow reference to draft Constitution bills that had beensubmitted to Federal Conventions in 1891, 1897, and 1898, in order to clear upthe interpretation, inter alia, of the second paragraph of S. 92. Griffith C. J. in Stateof Tasmania v. The Commonwealth, 1903-1904) C. L. R. 329 justified thisreference as a matter of history of legislation , but was careful to add that theexpressions of opinion of members of the Convention should not be referred to id. at 333). It is interesting to note that all three members of the original HighCourt Bench appointed in 1903, Griffith C.J., Barton and O'Connor JJ. (and,indeed, also Isaacs J. who was appointed to the High Court shortly afterwards)had active political backgrounds, and all had played leading roles at the Conventionof 1897-1898, which immediately preceded Federation. In a sense, then, theirposition was often not very far removed from that of mediaeval English judgeswho have been recorded to observe that counsel argued in vain on interpretationsince the judge himself had assisted at the drafting. In this regard, note especiallyid. at 351) the judgment of Barton J ( the Father of Australian Federalism , andthe first Prime Minister of the Australian Commonwealth).It is accepted in Australia, however, that where legislation forms or may formpart of a scheme, then all relevant legislation forms part of the circumstanceswhich a court may consider. See W. A. Moran Pty. Ltd. v. Deputy Federal Com-missioner of Taxation, 1940) A. C. 838 (P. C. where a number of Commonwealthand State taxing and other Acts, representing a comprehensive scheme of assistanceto the wheat industry, were considered together by the Court. The Privy Councilwas also prepared to examine the record of the conference at Canberra betweenthe Commonwealth Prime Minister and the six State Premiers, which agreed uponthe scheme. See Viscount Maugham's judgment on behalf of the Privy Councilat 848. See also South Australia v. Commonwealth, 1942) 65 C. L. R. 373 TheUniform Tax Case) where Latham C. J. after noting that the preambulatory state-ment of objects might, in a doubtful case, turn the scale, but that such a declarationby a Parliament of limited powers cannot be regarded as conclusive, agreed withthe other members of the Court that evidence of speeches made in Parliament orof the report of a committee on which legislation is based, adduced to show thepurpose or intention of Parliament or of the existence of a scheme of legislation,

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judicial attitudes to constitutional functions which English courtsdo not have. Another is the continued dominance of a conceptionof the judicial function, which, if it is not of the slot-machinevariety, is nearer to it than to the heresies that are now orthodoxto most American lawyers and judges on the appellate level. Veryfew Justices of the Supreme Court of the United States, since theBrandeis Brief was named, would be prepared even to argue thatthe Court's task, for instance in enforcing the Fifth and FourteenthAmendments, was a mere matter of application of the constitutionalprovisions, free of the social knowledge and value judgments of thetribunal. Rather, if a stranger's comment be permitted, the presentmembers of the Supreme Court have gone too far towards reducingmany constitutional provisions to mere pegs upon which to hangsocial knowledge'and value-judgments.

The High Court of Australia, by contrast, still clings to themore modest view of its constitutional function, namely that theyare not concerned with politics , or economics or sociologicalinquiry , or value judgments, but with the provisions only of theconstitutional instrument under application. As Latham C. J. ob-served in South Australia v. Commonwealth, the famous UniformTax Case, which more than any other revolutionised the politicaland economic structure of Australian federation:

Thus the controversy before the Court is a legal controversy, nota political controversy. It is not for this or any court to prescribepolicy or to seek to give effect to any views or opinions upon policy.We have nothing to do with the wisdom or expediency of legisla-tion. Such questions are for Parliament and the people.II. The Full Immunity from Doubt of the Judicial Mind '

The will to believe in the full immunity of the judicial mindfrom all extra-legal problems and especially problems of evaluation,has its most spectacular results in constitutional matters. And it isto some of these results that the present paper is directed. Thewill so to believe characterises the members of the Court generally,even be it said, those more interested in American institutions. Siris irrelevant to the determination of the validity of legislation, and therefore in-admissible. (See especially per Latham C J id. at 409-410). 3 (1942) 65 C.L.R. 373, 409. The illustrations which the Chief Justice gaveof his observation were less open to attack than the unqualified proposition itself.

13 See ir Frank Gavan Duffy's delightful verses (pseud. Vie Manque )in Dream of Fair Judges reprinted in 19 A-usT. L J 3.

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Owen Dixon's interests in American law were no doubt enhancedduring his important wartime mission to Washington, when hemade contacts fruitful for both countries with the American Benchand Bar. But his views on this matter, as expressed shortly beforehis departure, do not appear to have been materially altered asshown in the Bank NationalisationCase in 1948.

This learned judge's position in Waghorn v Waghorn 5 in1941 is worth a preliminary glance before we approach the mainconstitutional issue to which this paper is directed, for by the verytriviality of the private law point there at issue it exhibits inmarked degree the sincerity with which the ablest judges mayabnegate the very creative activity which their decision presupposes.In momentous constitutional questions, where the decision willaffect the lives and fortunes of all citizens, along with the politicaland economic future of the Commonwealth, the nature of judicialunawareness is similar, but its exposure is too often hindered bythe warmth with which critics divide on the merits of the matter.

In the Waghorn Case the short question was whether theappellant, whose spouse had (unknown to her) given her goodground for ceasing to cohabit, could nevertheless be guilty of de-serting the spouse. The matter was complicated by a certain con-flict of tendency between the earlier Australian High Court de-cisions on this point 6 and the view of the English Court of Ap-peal. Dixon J. purported to decide the matter on the meaning of desert as an ordinary English verb about the meaning of whichthere should be no mystery even in the law . Desert self-evidently involved a breach of obligation whether legal or moralwhich would not exist if ground had been given, whether or notthe wife now charged with desertion was aware of the marital of-fence.- This reasoning, said the learned judge, attempts to followlegal principles and, as the fashion once was, to put out of con-sideration social or sociological conceptions or preconceptions. 'It might be of little import that a Professor of Jurisprudence is

4 Bank of New South Wales v. The Commonwealth, (1948) 76 C. L. R. 1. 5 (1941) 65 C.L.R. 289. 6 Notably Crown Solicitor v. Gilbert, 1937) 59 C. L. R. 322. 7 Herrod v. Herrod 1939) P. 11, approved by the Court of Appeal in Earn-

shaw v. Earnshaw 1939) 2 All E. R. 698.17 Waghorn v. Waghorn, (1941) 65 C. L. R. 289, 296.

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insensitive to this self-evident meaning of the word desert ; themeaning might even be self-evident, though Sir Boyd Merriman P.of the English Court of Appeal and other judges declined to see it.But such facts should give pause. If the learned judge had nodoubts it may have been precisely because social or sociological con-ceptions or pre-conceptions resolved them.

But the latent conceptions and preconceptions on this pointpaled into insignificance when the learned judge turned to the ques-tion whether the High Court ought to follow its own decisionswhen they conflicted with those of the English Court of Appeal:

If this court is convinced that a particular view of the law hasbeen taken in England from which there is unlikely to be any de-parture, wisdom is on the side of the court's applying that view toAustralian conditions, notwithstanding that the court has alreadydecided the question in the opposite sense. The fact that we stillbelieve in the correctness of our own decision, as I do in the presentcase, is not in itself an adequate ground for refusing to follow thiscourse.... The common law is administered in many jurisdictions,and unless each of them guards against needless divergencies of de-cision, its uniform development is imperilled.18

Why did Dixon J. assume that uniformity with English de-cisions is so vital as to justify overriding the Court's own decision,which the Court still believes to be the correct decision? Oughtwe not rather say that English decisions, of necessity renderedby reference to English conditions, have no claim to applicationto Australian conditions until similarity of these conditions isshown. The question becomes the more intriguing as the learnedjudge informs 0 us that divergencies from English authority aretolerable on minor matters of application of a principle but thaton the major principles themselves uniformity is vital. For it mightreasonably be thought that the position was just the reverse; thatin developing a system of law for Australian conditions, it wouldbe precisely the major matters of principle whose applicability toAustralian conditions should be carefully scrutinised by the localcourt.

The answer to our question can scarcely be merely the conveni-ence of uniformity to the Australian legal profession as affording

s Id at 297.10 On this point see the courageous article by Parsons, English Precedents

Australian Courts UNNERSr Y OP WESTERN A-USTRALIA ANNTTAL L w REviEw 211(1949).2 Waghorn v. Waghorn, (1941) 65 C. L. R. 289 297.

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the maximum utility to English textbooks, digests and reports.Other things being equal, this is, of course, desirable: but thisitself would be a social or sociological consideration, whichDixon J. thinks that judges ought to eschew. Only it would be arather warped and emasculated resort to such considerations.'0

III. HistoricalBackground o S 92In fashioning the Constitution of the Commonwealth of Aus-tralia the principle established by the United States was adopted inpreference to that chosen by Canada. It is a matter of historicalknowledge that in Australia the work of fashioning the future Con-stitution was one which occupied years of preparation through the

medium of conventions and conferences in which the most distin-guished statesmen of Australia took part. Alternative systems werediscussed and weighed against each other with minute care. TheAct of 19 must accordingly be regarded as an instrument whichwas fashioned with great deliberation, and if there is at pointsobscurity in its language, this may be taken to be due not to anyuncertainty as to the adoption of the stricter form of federal prin-ciple, but to that difficulty in obtaining ready agreement aboutphrases which attends the drafting of legislative measures by largeassemblages.21The early recommendation of the Committee of the Constitu-tional Convention in 1891 had contained only two clauses relating

to trade and commerce, both of them based on the model of theUnited States Constitution. One clause forbade preference to theports of one State over those of another. The other empowered the

20' A rather fanciful alternative basis for this assumption might be by wayof gloss upon 9 GEo IV, c 83 It would proceed as if to assume that the commonlaw is immemorial and immutable, and that the common law of the AustralianCommonwealth, of the Australian States, and of England has continued to beidentical since 1828, except to the extent that it may have been altered by statute.Such a view was all but formulated by Griffith C.J. in R. v. Kidman, (1915) 20C.L.R. 435: It is clear law that in the case of British Colonies acquired bysettlement, the colonists carry their law with them so far as it is applicable tothe altered conditions. In the case of the eastern Colonies of Australia, this generalrule was supplemented by the Act of 9 GEO IV, c 83 In so far as any partof this law was afterwards repealed in any Colony it, no doubt, ceased to haveeffect in that Colony, but in all other respects it continued as before. When in1901 the Australian Commonwealth was formed the current which had beentemporarily diverted into six parallel streams coalesced.For a recent High Court consideration of its attitude towards House of Lordscases see Piro v. Foster, (1943) 68 C. L. R. 315. Waghorn v. Waghorn, (1941) 65C. L. R. 289 is the latest consideration of its attitude to the Court of Appeal.And see generally R. W. Parsons, supra note 19

2 Lord Haldane in A. G. v. Colonial Sugar Refining Co. Ltd., (1914) A C237 252

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Federal Parliament to annul State laws interfering with freedomof interstate trade. The former was based on the United StatesConstitution, Article 1, section 9 clause 6; the latter was a gen-eralisation from the judicial interpretation of the Federal powerover interstate commerce in the United States. And in the final out-come the first placitum of S. 51 confers power on the Common-wealth Parliament with respect to trade and commerce with othercountries and among the States , this being on its face indistin-guishable from the power of the American Congress to regulatecommerce with foreign countries and among the several States .

S. 92 on the other hand, has quite a different origin and hasno American counterpart. It provides as follows:On the imposition of uniform duties of customs trade com-merce and intercourse among the States whether by means of in-ternal carriage or ocean navigation shall be absolutely free.But notwithstanding anything in this Constitution goods im-ported before the imposition of uniform duties of customs into anyState or into any Colony which whilst the goods remain thereinbecomes a State shall on thence passing into another State withintwo years after the imposition of such duties be liable to any dutychargeable on the importation of such goods into the Commonwealth

less any duty paid in respect of the goods on their importation.An able contemporary observer of the long years of pre-Constitution debate has written of this section:

A section which has already been given four interpretationS22 ...not one of which it may be added is justified by the language; whichshows our High Court undeservedly in a light which is inconsistentand regrettable which robs the states of much of their promisedautonomy and tends to wholly prevent certain lines of economicdevelopment such may well go. If it ever had a reasonable pur-pose that purpose ceased with the referendum of 1899. Since thenit has merely cumbered the earth and the law books.2

S. 92 according to Holman and other authorities,2 was de- See infra no 13-17.2 Holman, S 92-Should t be Retained? 7 AusT. L J. 140 145 1933-34).

See also HoLr A TmRE LECTuRES oN = USTR XLI N CONSnITUTION 1928) W. A.Holman, K. C. had a distinguished career both in politics and the law, being thefounder in the last decade of the 19th century of the Australian Labour Party, andPremier of New South Wales 1913-1920. See EvATr, rSTR Li LABOUR LEADER, aBiography of Holman.)

24 See Beasley, The Commonwealth Constitution: S. 92 Its History in the Fed-eral Conventions I UNmw~si~y or WESTERx AusTRArA ANNuAL LAW REviEw 97-273(1943); GARRAi THE CoMMxG COMMONWEALTH 142; Barton J. (who was outstand-ing in the constitutional debates) in Fox v. Robbins, 1909) 8 C. L. R. 115.

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considered in company with S's. 89 and 93, sections which madesimilar provision of a transitory nature, in relation to customs andexcise duties.

Later examination of the documents by Professor F. R. Beas-ley2 confirm the general inferences drawn by Mr. Holman. AndProfessor Beasley is also concerned to stress that insofar as thelegal import of S. 92 was considered at all, S. 92 was not regardedas applicable to the Commonwealth, since the Commonwealth'sexclusive power to impose customs duties under S. 90 and the re-quirement of 9 88 that these customs duties be uniform, removedany danger to free trade from Commonwealth action.2 9

As against the restrictive view, drawn from the Conventiondebates, of Holman and Professor Beasley and others, there hasto be placed the unshakeable fact that S. 92 in its present formwas finally and with deliberation left in the Constitution. Theconsequential half-century of tangled interpretation was well fore-shadowed by the outstanding Australian constitutional lawyer Har-rison MooreO soon after the adoption of the Constitution:

By a clause which binds both the Commonwealth Parliament and28 Beasley, supra note 24 .20 While at the Melbourne and Sydney sessions of 1897-1898, a few members

thought that S. 92 might be interpreted as binding the Commonwealth, the pro-hibition on the Commonwealth they envisaged was merely a prohibition againstthe setting up of a uniform tariff wall between all the States. The only otherrestriction envisaged on the Commonwealth in this regard was separately em -bodied in S. 99, prohibiting preference by the Commonwealth of one State overanother by any law or regulation of trade, commerce or revenue. It was never present, concludes Professor Beasley, to the minds of membersthat tIcre was the slightest risk that S. 92 might be deemed (a) to whittle downthe power conferred on the Commonwealth by S. 51 (i), (b) to apply to all theother powers conferred on the Commonwealth if they were related, however dis-tantly, to trade and commerce among the States, or c) to have the effect of creatinga legislative no-man's land, which neither Commonwealth nor States could enter.Beasley, supra note 24, at 282. Cf Owen Dixon, K. C. as he then was) inevidence in 1927 before the Royal Commission on the Constitution, MiNuTEsoF EvIDENcE 777 778 1929) that probably the real purpose for which S 9 wasenacted would be fulfilled if it ran, the States shall not by any discriminatorylaw or executive act impair the freedom of trade, commerce and intercourseamong the States and the territories of the Commonwealth. This would makeit clear that the restriction did not apply to the Commonwealth, and thatit did apply to the States, but that the restriction did not prevent the States byuniform laws in relation to commerce generally regulating intrastate and interstatecommerce alike. Such a regulation, so far as it included transactions of interstatecommerce would necessarily be subject entirely to the will of the Federal legislaturewhich could intervene and displace it under S. 51 i) of the Constitution, bymaking an inconsistent law.30 MooRE, THE COz,noNwALTH O AuSTRALIA 204 1902).

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the States, (the constitution) provides that trade, commerce, andintercourse shall be absolutely free . But if interstate commerceis to be absolutely free from all interference or regulation, what be-comes of the power confided to the Commonwealth Parliament tomake laws with respect to trade and commerce among the States?It may be that S. 92 expresses as to the States the doctrine of non-interference with interstate commerce, which has been declared inthe United State to arise by necessary implication as to matters ofa national character. If so, it must apply unequally to State andCommonwealth; and the latter, while it may be restrained by itfrom taxation, prohibition, and perhaps from all regulation, theessential and unequivocal nature of which is to impede commercemay for the rest operate freely upon the matter. And, of course, itis hardly a correct assumption that every regulation of commerce,even by the State, is an intrusion upon freedom of commerce, atruth which is recognised in the sufferance of the States to deal withthose matters of interstate commerce which admit of local regula-tion- aids to commerce , as they have been called.

The relation of the historian's view of the intention of thedraftsmen to the view later taken by the judges is largely condi-tioned by the refusal of British Courts to admit reference to legis-lative history and travaux priparatoires in aid of interpretation,an attitude contrasting starkly with that of the Supreme Courtof the United States. No one would place Lord Wright among theleast progressive representatives of the British judicial tradition.But it is to Lord Wright that we owe one of the clearest expositionsof this attitude towards the history of the drafting. Speaking inJames v Commonwealth of S. 92 of the Australian Constitution,His Lordship observed:

Nor can any decisive help here be derived from evidence ofextraneous facts existing at the date of the Act of 1900; such evidencemay in some cases help to throw light on the intention of the framersof the statute, though that intention can in truth be ascertained onlyfrom the language used. But new and unanticipated conditions offact arise. It may be that in 1900 the framers of the Constitutionwere thinking of border tariffs and restrictions in the ordinary sense,and desired to exclude difficulties of that nature, and to establishwhat was and still is called free trade and to abolish the barrierof the State boundaries so as to make Australia one single country.Thus they presumably did not anticipate those commercial and in-dustrial difficulties which have in recent years led to marketingschemes and price control, or traffic regulations such as those forthe coordination of rail and road services, to say nothing of newinventions such as aviation or wireless. The problems, however, of

3 Author's italics.3 (1936) A. C. 78 at 614-5.

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the Constitution can only be solved as they emerge by giving effectto the language used.The curious implication of this argument is to be noted. It

amounts to saying that even if the framers only intended by S. 92to prohibit border tariffs, etc. in the ordinary sense, i e to guaran-tee free trade , and though they never for a moment contemplatedthe possibility of it prohibiting marketing schemes such as thepresent, nevertheless it was the duty of the court to apply thelanguage used in the unintended sense, now for the first time maderelevant by changing economic techniques. All this is made the morestriking by Lord Wright's admission 2 that the narrower historicalmeaning is favoured not only by the timing, but by the placing ofS. 92 among the neighbouring sections, and because the provisoin the second paragraph to S. 92 relates to customs duties. Headds, as if it explained the matter, that it is clear that much moreis included in the term , giving no other reason than that theremay be other modes than customs duties, etc. of interfering withfreedom.

IV Interpretations of Absolutely Free before the BankNationalisation Case.

It is unnecessary for our purposes to canvass in detail thedecisions of the High Court and the Privy Council in the subsequenttwo generations which, in Holman's words, present a long andagonising struggle o get back to the language, a struggle pri-marily between the demands of statesmanship and the judicialconscience still clinging to the non-existing letter of the law. 34

Professor K. H. Bailey ' in 1933 detected four main views ofthe meaning of absolutely free , around which the debate up tothat time had centered. The first of these, the narrowest view,limiting the meaning of freedom in Sir Samuel Griffith's words tofreedom from taxes, charges or imposts 35 was rejected y thecourt almost immediately, 0 and has never been rehabilitated. 7

Id. at 628.4 Holman, su~pr note 23, at 143.341 Bailey, Interstate Free Trade: The Meaning of Absolutely Free, 7 AUST.

L J 03 1933).5 Fox v. Robbins, 1909) 8 C. L. R. 115.6 It was rejected, interestingly enough, on the main ground that this, in

view of S. 90 would make S. 92 redundant. Mr. Holman's point was, of course,that it was legally redundant, its import being merely political.

7 Rich J. in James v. Cowan, 1929-30) 43 C.L.R. 386, 423.

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This view, while indicated by the historical context, would have re-quired a reading down of the words absolutely free so as to limitthe kind of burdens at which they struck, though preserving theirquantitative reference within that range. This would have been asimpler, and no more drastic, reading down than those later toler-ated, but it was perhaps not to be expected from a court which de-nied itself access to legislative travaux prjparatoires The re-jection of the historical limitation confronted the court immediatelywith even graver difficulties, since it could not give the words ab-solutely free their full literal extension either. The judges weredriven to an enterprise, which half a century has by no meanslightened, of explaining the elliptical and expounding the un-expressed. ' a8

Chronologically the next meaning favoured was that abso-lutely free meant free of any restriction imposed by virtue of itsinterstate character .39 This meaning would strike down only lawswhich discriminated between interstate and intrastate trade in theburdens imposed. This second view on the whole prevailed until1920, when the dissenting view taken by Isaacs J. during the earlierperiod4 came to command a majority in the court. This was that absolutely free meant that the acts and transactions of whichinterstate trade and commerce consist must be left absolutelyfree , 4' so that even a restraint imposed equally and without dis-crimination on intrastate and interstate trade was obnoxious.This view was first established in McArthur v Queensland, whichstruck down a Queensland statute fixing maximum prices of cer-tain commodities. So also Commonwealth v South Australia whichdealt with a state tax on all sales of petrol. Its effect was to expandthe scope of the prohibition in S. 92 ncluding therein any encroach-ments on the freedom of contract and choice of vocation of in-dividuals engaged on interstate commerce. But its effect was

38 Thus Isaacs J. who knew as much as anyone of the narrow import ofS. 92 in the minds of the draftsmen, later led the movement to extend its legalmeaning.

381 Rich J. in James v. Cowan, (1929-30) 43 C. L. R. 386, 422.O Id at 423, quoted by Bailey, supra note 34a, at 104. The locus classicus is in

Sir Samuel Griffith s judgment in Duncan v. Queensland, (1916) 22 C. L R. 556, 574.4 ee his dissent in Duncan v. Queensland, supra note 394 Bailey, supra note 34a, at 1044 (1920) 28 C.L.R. 530.43 (1926) 38 C.L.R. 408.

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simultaneously to read the prohibition as applicable only to theStates; for the judges thought 4 that if so wide a prohibition weredirected at the Commonwealth, its effect would flatly contradict thegrant to the Commonwealth Parliament in S 51(i) of the power tolegislate with respect to trade and commerce... among the States.McArthur v Queensland was overruled on this point in James vCommonwealth4 5 which will be considered shortly,

This third meaning also made acute the problem of definingwhat were acts of interstate trade , since if all aspects of aninterstate trader's activities were immune from State law, Stateregulation of traffic, health, working conditions, minimum wages,bankruptcy, and the like, of which everyone recognised the validityand indeed necessity for, would be forbidden. And this presentedparticular difficulties, when the regulation, which everyone recog-nised as necessary, was directed at the very movement across Stateboundaries which distinguishes interstate from intrastate trade.It is not surprising, therefore, that the Court in 928 in Ex parteNelson4 divided equally as to the constitutionality of a statute pro-hibiting the importation into New South Wales of stock from aQueensland district ridden with infectious disease in stock.The confusion in the cases of the next twenty years arisesmainly from the difficulty of isolating acts of interstate trade fo rthe purpose of applying this third meaning, and it is in a vain effortto render this problem more precise that such tests as that of the real or true nature of the impugned legislation, the pith andsubstance , the direct or incidental operation of legislationupon interstate trade have been proposed. The statute in Ex parteNelson for instance, was rendered tolerable to S 92 by the findingthat its true nature was that of a quarantine law, and that its effecton the act of interstate commerce was innocuously incidental. 8 Andthis tortuous aioproach later won the supuort of a clear majority ofthe Court. The effect, as Professor Bailey pointed out, was to

See especially the joint judgment of Knox C. J., Isaacs J. and Starke J., 8C. L. R. 30, 556-598.

5 1936) A. C. 578. 6 1929) 42 C L R 209. 7 See Bailey, supra note 34a and see infra pp. 490-96.48 Knox C. J., Gavan Duffy and Starke JJ., whose view as including the

Chief Justice prevailed. The opposite view of Isaacs, Higgins and Powers JJ. heldthe statute bad.

9 See McArthur v. Queensland, 1933) Argus L. Rep. 209, where in variousforms it was adopted by all the judges, except Dixon J

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return by a circular route to something very like the second view,departing from the third view even while purporting to apply it.As a rather problematical summation of the cases betweenMcArthur s Case5 in 1920 and 1933, Professor Bailey suggests that absolutely free had come (in the fourth place) to mean abso-lutely free from State laws with respect to interstate trade andcommerce. Here the essence of the search has shifted from thenature of the act which is regulated (act of interstate trade), viathe aspect of the act which is regulated, to the assumed target atwhich the legislative arrow is shot, and this be it remembered wasthe main gist of the second test mentioned above. The State , asProfessor Bailey says, can under this test tax transactions ofinterstate trade, it can even forbid interstate importation, so longas it does so in the exercise of some power other than the tradeand commerce power

In its nature, any summation of a body of conflicting judicialrationalisations as profuse as that of the High Court of Australiaon this issue must be an oversimplification. In particular, it missesthe curious tangle of reasoning surrounding the question of theclaims of individuals as such to enjoy, and to demand legal supportin the enjoyment of the absolute freedom conferred by S. 92Mr. R. G. Menzies as Attorney-General in James v Commonwealth52 phrased it thus: Whether S. 92 protected freedom oftrade, commerce and intercourse as a whole only, and not dis-tributively? And the point is crystallised in the argument madeby the Commonwealth in the Bank NationalisationCase that S 92would not be infringed if the total volume of banking business werenot decreased, even though the private banks and all other in-dividuals were deprived of their freedom of contract and vocationin this regard.

In this form the issue is a clear one. But some confusion hasarisen between this question and another question, which is quitea different one. This is the queston whether, independently of anycause of action which would have existed if legislation invalid underS 92 had never been passed, S. 92 itself gives to an individual in-

5 McArthur v Queensland, 1920) 28 C. L R 530.5 On the frequent difficulties of the High Court and the Privy Council inunderstanding each other's reasoning in this matter, see Bailey, supr note 34a, at109-111. These mutual misunderstandings reach a high point in the High Courtdecision in the Bank NationalisationCase

5 1936) A. C. 578.

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jured by the operation of such invalid legislation a cause of actionon the analogy of a private action for damages arising in certaincases from breach of a statutory duty. This question came squarelybefore Dixon J. in James v. Commonwealta in an action fordamages for loss of trade and the like due to the refusal of othersto deal with the plaintiff by reason of his noncompliance with astatute subequently held to be invalid under S. 92. Dixon J., in ajudgment not seriously questioned since that time, held that nosuch cause of action arose under S. 92.

This latter question does not concern the scope of the pro-hibition in S. 92, but only what remedies lie in respect of legislationadmittedly within the prohibition On the other hand, the questionposed by Mr. Menzies is precisely a question of the scope of theconstitutional commandment.

In the cases, the question formulated by Mr. Menzies arose forsolution in relation to certain early holdings, especially The WheatCase,5 which upheld the compulsory purchase outright of goods bya State even where, in the normal course, the goods would subse-quently have flown into the stream of interstate trade, and eventhough some lesser interference with the power of disposition ofthe goods in interstate commerce would have been invalid. Thetheory was that S. 92 guaranteed the interstate mobility of thegoods, and that for this purpose it was not material who was theowner, so that a mere compulsory transfer of ownership to the Statedid not violate S. 92.It was in opposition to this view that Isaacs J. in James v.Cowani described the right protected by S. 92 as a personal rightattaching to the individual and not merely attaching to the goods.S. 92 did not merely protect the interstate mobility of goods asgoods; it also protected the freedom of anyone who owned themat a given time to move them in interstate commerce.

Isaacs J. s point was therefore immediately directed to re-moving the limitation on the scope of S. 92 imposed by The WheatCase. But the broader distinction later made by Mr. Menzies wasimplicit in the debate In essence, the controversy emerged andstill had to be considered in the Bank NationalisationCase ofwhether the scope of the prohibition in S 92 included within its

53 1939) 62 C.L.R. 339, especially 361-62.5 N.S.W. v. Commonwealth, (1915) 20 C. L. R. 5455 (1930) 43 C.L.R. 386, 418.

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protection the right of all persons to have their individual freedomof activity in interstate commerce unrestricted by State and Com-monwealth legislation; whether in short, the guarantee in S. 92 in-corporates a guarantee of freedom of contract and choice of vo-cation to all individuals operating in interstate trade.55

V. The Commonwealth as Subject to S 92It was not until James v. Commonwealth in 936 G that it was

squarely held that S 92 bound the Commonwealth as well as theState Governments. The main issue in this case was the consistencywith S 92 of the Commonwealth Dried Fruits Act 1928-1935 (No.11 of 1928-No. 5 of 1935) and of the Dried Fruits (InterstateTrade) Regulations of 1934 made thereunder, which wholly pro-hibited interstate trade in dried fruits without a license and, evenwith a license, partially prohibited such trade by limiting theamount of dried fruits that could be sold within the Commonwealthto a quota of each trader s production. These Commonwealthmeasures were an attempt to make good the failure of the SouthAustralian legislation to the same effect to pass the test of S. 92.All these efforts were directed to preventing the domestic price ofdried fruits from falling to the level of the world price, which atthat time was very low. The High Court, consisting of Rich,Starke, Dixon, Evatt, and McTiernan JJ., upheld the legislation17on the ground that McArthur v. Queensland bound them to holdthat the Commonwealth was not bound by S. 92.A main argunent of the Commonwealth was that, if appliedto the Commonwealth, S. 92 would contradict S. 51 (I). Mr. Men-zies, of counsel for the Commonwealth, stressed the repugnancy ofthe two sections if the words absolutely free involved an abso-lute absolute and not a qualified absolute and that the phrases inboth sections were (apart from the words and intercourse ) iden-tical. In view of the fact that S. 92 was binding on the States, thequestion before the Privy Council involved (he urged) the entireinterstate trade and commerce power, and if that power were de-

55 The develonment of this doctrine as to the guarantee of individual rightsis further examined below at pp 480-84 489 505.6 (1936) A. C. 578.

57 1935) 52 C L R 570.58 1920) 28 C L R 530.59 Dixon, Evatt and McTiernan JJ. indicated that, apart from McArthur s

Case they would have taken a contrary view.

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stroyed by S. 92, then quite clearly there is a gap in governmentalpower in Australia now which did not exist before Federation. 0Lord Wright, giving the opinion of the Board, rejected this

position on two grounds. The first is a singular comment on thepretension of the courts that they have been concerned not withhistorical contexts or social policy, but with the literal words ofthe Constitution. The word absolutely , he said, in absolutelyfree was merely popular or rhetorical . Trade, he said, waseither free or not free; the word absolutely added nothing andcould be ignored. But from the standpoint of literal interpretationthe matter is even stranger. For his rejection of the Common-wealth argument required him to say that trade and commercecould be free under S. 92, even though (as the cases undoubtedlyshowed) they were subject to many and varied regulatory statuteseither of the States or the Commonwealth. In this way he couldshow that S. 92, if applied to the Commonwealth, would not whollycancel out the Commonwealth's power over interstate commerceunder S. 51(I).

It is, however, but a partial truth to say, as Lord Wright said,that the word absolutely can be ignored. The net result of thesupposed literal interpretation has done far more than this. It hassubstituted for the words absolutely free not the word free ,but the words free up to a point to be determined from time totime in particular cases by the judges.

There is thus presented the extraordinary spectacle of a courseof decision which, while declining to give the expression abso-lutely free the meaning which on all the evidence it seemed to havein the minds of the draftsmen, namely, free of customs and liketaxes at the frontier , is yet prepared not only to ignore words de-liberately inserted, but to read them in a sense that is at least apartial contradiction of what is expressed.

Lord Wright's second ground for denying repugnancy betweenS. 51(1) and the application of S. 92 to the Commonwealth wasmore convincing. Since the Commonwealth's power over interstatetrade under S. 51(i) was not in any way exclusive, each state, hesaid, also had the power to regulate interstate trade. Insofar as theCommonwealth sought to escape from S. 92 by a supposed repug-nancy with S. 51 (i), the same argument would have been available

01 1936) A. C. 578, 595.

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to each State as a means of escape from S. 92. The only differencebetween the Commonwealth and States positions in the matter was(he thought) that the former s power over interstate commerce wasexpress, and the latters implied.So to hold was, of course, to turn back deliberately over theground covered by McArthur v Queensland. ' The High Court inthat case, having widened the boundaries of the prohibition in S. 92,felt constrained by its apparent repugnancy, as thus extended, tothe federal power over interstate trade and commerce granted byS. 51(i), to hold that S. 92 did not bind the Commonwealth. LordWright narrowed the boundaries of the prohibition in S. 92, since hedisapproved of the holding in McArthur's Case that a price-fixingstatute applying uniformly without discriminatory intention to bothinterstate and intrastate trade was obnoxious to it. 2 Having thusnarrowed the prohibition, he found a way out of the alleged re-pugnancy between S. 92 and S. 51(i), since it left some power tothe Commonwealth over interstate commerce, even after the fieldprohibited by S. 92 had been taken awayY

Lord Wright did not find it necessary to define the exact de-gree of narrowing thus undergone by the prohibition of S. 92. Itwas sufficient to found his view of the non-repugnancy of S. 92 andS. 51(i) that the power to regulate under the latter was in somerespects wider than the prohibition in S. 92. But it would appearfrom the earlier authorities which he selected to buttress his view,that the power of the Commonwealth (despite S. 92 to interferewith the freedom of contract and free choice of vocation of indi-viduals would be saved by his interpretation. He relied heavily onRoughley v New South Wales, holding consistent with S. 92 a lawmaking it an offence to act as farm produce agent unless licensedby the State, etc. (Isaacs J had there vigorously dissented on theground that the agency relation thus interfered with was a partand often an essential part of interstate trade.) He relied too onR. v Vizzardfl holding that the New South Wales Transport Actof 1931, prohibiting the operation of public motor vehicles in New

6 1920) 28 C. L. R. 530.6 1936) A. C. 578, 619.63 At the same time Lord Wright was careful to assert his view (at 62S thatthe presence or absence of discrimination between interstate and intrastate trade

was not a decisive criterion of what regulation S. 92 permitted.64 (1933-4) 42 C L R 162.65 1933-34) 50 C L R 30.

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South Wales unless licensed, was not a violation of S. 92. Evatt J.had there said that:

S. 92 does not guarantee that, in each and every part of atransaction which includes the interstate carriage of commodities, theowner of the commodities, together with his servant and agent andeach and every independent contractor, cooperating in the de-livery and marketing of the commodities, and each of his servantsand agents, possess, until delivery and marketing are completed, aright to ignore state transport and marketing regulations, and tochoose how, when and where each of them will transport and marketthe commodities.6 7

Lord Wright apparently approved of this reasoning, for hewent on to say that, if correct, then in principle it applies mutatismutandis to the Commonwealth's powers under S. 51 I) and showsthat S. 51 I) has a wider range than that covered by S. 92 -the conclusion to which he himself had come.

What view Lord Wright expressed of the scope of permissibleregulation under S. 92 was to be a matter of surprisingly wide dis-agreement in later cases. He had rejected the wide interpretationof freedom in IcArthur s Case on the ground that such widefreedom was incompatible with the regulation which the judges inthat very case recognised to be permissible, e.g. that every saleof goods is subjected to the relevant Sale of Goods Act, every billof exchange to the Bills of Exchange Act, etc.s He had agreed withEvatt J. that S. 92 does not entitle those engaged in interstatecommerce to ignore state transport and marketing regulations .69He had reconciled with S. 92 the exclusion of everyone but thefederal postal service from the business of carrying letters forreward by the Post and Telegraph Act 1901-1923,7o and the re-sulting restraint on freedom of intercourse by two arguments, oneof them with respect irrelevant and question-begging, the otherevasive. The one was that this exclusion of private carriage of let-ters was a limitation notoriously existing in ordinary usage in allmodern civilised communities , and did not impede freedom ofcorrespondence, but merely canalised it.' The other was that

6 Id at 94. Quoted by Lord Wright in James v. Commonwealth, (1936)A C 578, 621.

7 Cf. the other Transport Cases infra note 150, on all of which, and on therecent case of McCarter v. Brodie, (1950) Argus L. Rep. 385, see infra pp. 497-502. 38(1936) A. C. 578, 628-9.3 uprap. 472.7 (1936) A C 578 625.7 Cf. his attempted explanation of the consistency with S. 92 of the IV=-

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N W YORK UNIVERSITY L W REVIEW

The Banking Act of 1947 did not purport to extend to StateGovernment banking (excluded from federal power by placitumXXIII , but was solely directed at private banks of which therewere fourteen in number, and those of overseas incorporation. S Asto these banks, it gave power to the Commonwealth Bank com-pulsorily to acquire the shares, and to take over their businesses,subject to compensation to be agreed upon, or in default, to bedetermined by a tribunal other than the High Court. In addition,the Banking Act of 1947 prohibited in S. 46 the carrying on ofbanking business by private banks in the following terms:

1) Notwithstanding anything contained in any other law, or inany charter or other instrument, a private bank shall not,after the commencement of this Act, carry on banking busi-ness in Australia except as required by this section.2) Each private bank shall, subject to this section, carry on bank-ing business in Australia and shall not, except on groundswhich are appropriate in the normal and proper conduct ofbanking business, cease to provide any facility or serviceprovided by it in the course of its banking business on thefifteenth day of August, One thousand nine hundred andforty seven.

3) The last preceding sub-section shall not apply to a privatebank if its business in Australia has been taken over by an-other private bank or after that business has been takenover by the Commonwealth Bank.(4) The Treasurer may, by notice published in the Gazette andgiven in writing to a private bank, require that private bankto cease, upon a date specified in the notice, carrying onbanking business in Australia.5) The date specified in a notice under the last preceding sub-s Its immediate politico-legal background was the Local Government Bank-

ing Act of 1946, whereby the Commonwealth had sought to prohibit private banksfrom receiving the deposits and performing banking functions generally for localgovernment authorities throughout Australia, thus diverting this considerablebusiness to either the State banks or its own banking instrument, the Common-wealth Bank. In Melbourne Corporation v. The Commonwealth (1947) 74C. L. R. 31, the High Court struck down this earlier Act as unconstitutional on theprincipal ground that the statute violated the implied immunities of State instru-mentalities, and the American doctrine followed by the High Court until The Amalga-mated Society of Engineers v. Adelaide Steamship Company, (1920) 29 C. L. R. 406.Thus was revived, after nearly thirty years, a doctrine supposed to have endedits Australian career.There is a widespread belief that it was the defeat of the Local GovernmentBanking Act which, politically speaking, pressed the Labour Government to themore extreme Act of 1947. And certainly there is some evidence that the privatebanks and the State governments would have preferred to see the earlier Actaffirmed.

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N W YORK UNIVERSITY L W REVIEW

cerned, four out of six judges were clear that it could not stand,only Latham C.J. and McTiernan J. being willing to hold its keyprovisions to be valid.' But as to some of the main grounds ofinvalidity relied on by one or other of the majority justices, a ma-jority of the justices took the opposite view.

Thus, on the scope of the Commonwealth's banking power,a main ground taken by Rich and Williams JJ. for striking downthe statute was that the concept of banking caught by placitumXIII should be restricted to the old mercantile law contractualactivity, that is, the regulation of banker-customer relations; andhence that power did not extend to the destruction of private bank-ing. Yet, this narrow view which helped to contribute two votesto the majority decision of four striking down the Act, was ex-plicitly rejected by a majority of four members of the Court,Latham C.J., Starke, Dixon and McTiernan JJ.

The same two judges who contributed to the majority holdingof unconstitutionality, because of an interpretation of bankingwhich the majority rejected, were again in a similar position on thequestion whether the Act was obnoxious to the provisions of the1927 Financial Agreement between the Commonwealth and theStates, and to S. 105A of the Constitution. They held the Actunconstitutional by implying, from the above instruments, a rightof each State to have available the loan facilities inter alia of theprivate banks, and therefore a right to demand that the privatebanks should not be destroyed. 4 But the four other members ofthe Court making up, on this point a majority, rejected this lastimplication on which nevertheless the majority decision was in partbased.

On the question of the consistency of the Banking Act of 1947,especially S. 465 to which the balance of this paper will be mainlydevoted, with the requirement of S. 92 that trade, commerce andintercourse among the States shall be absolutely free , the ma-jority holding against the Act was indeed also supported by a

8 (1948) 76 C.L.R. 1 149. All six judges held that the just compensationrequirement of S. 51 (xxxi) was violated. See supra note 5

84 The Financial Agreement of 1927 between the Commonwealth and theStates, which set up a Loan Council (representing Commonwealth and StateGovernments) to control borrowing by the State Governments, in return fo rcertain undertakings by the Commonwealth as to State debts and State grants. TheAgreement was submitted to and approved by a popular referendum in 1928, and wasembodied in a new S. 105A of the Commonwealth Constitution.

8 See supra pp 476-477 for text.

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majority of the rationesoffered-though still a somewhat hazardousone. Starke, Rich, Williams and Dixon JJ. would appear to havetaken the view that banking being a part of trade, commerce andintercourse, and a bank carrying on banking in more than oneState being engaged in trade, commerce and intercourse amongthe States, a law which prohibits individual persons or corpora-tions ' from carrying on banking is contrary to S. 92 insofar as theperson or corporation affected is in fact engaged in interstatebanking.

Two of these, however, Starke and Dixon JJ., shared theview of the dissenting minority 7 that the compulsory acquisitionof the private banks as going concerns was in itself within theCommonwealth's power of acquisition under S. 51 (xxxi), and werenot very definite whether such bare acquisition, if unaccompaniedby express prohibition of private banking, would infringe S. 92.Yet, if such bare acquisition were innocuous, nationalisation ofbanks could, as a practical matter, be carried out by successive actsof bare acquisition, whenever any private banks were able to re-establish themselves. And the opinion on this point of these twojustices, who concurred in striking down the Act, would, if joinedto the two dissenting judges, provide a ground whereby national-isation could lawfully be brought about by use of the power ofacquisition.

Again, Dixon J., though he was clear that the prohibition ofprivate banking in S. 46 violated S. 92, was quick to add that nodoubt S. 9 leaves open the regulation of trade and commerce atall events until regulation is pressed to the point of impairing truefreedom of interstate commerce. The freedom of interstate com-merce and intercourse which S. 92 assures supposes an ordered so-ciety where the mutual relations between man and man and govern-mnent are regulated by law. 8 He did not desire to cast any doubtupon the validity of laws regulating banking in the interests ofsecurity, reliability, efficiency, uniformity of practice, and so on. 89

He admitted that no logical distinction between such licit andillicit regulation was available, and he thought this absence ex-plained the divergent conclusions on S. 92 in particular cases. But8 Semble not necessarily all individuals or corporations.87 Latham C. J and McTiernan J.88 1948) 76 C L R 1 389.9 bid

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Starke J. 9o who was with Dixon J in the majority holding on thispoint, took pains to disagree with Dixon J.'s reasoning, while atthe same time he too agreed that the absolute freedom of S. 92was not an unrestricted privilege to engage in business or to con-duct it as one pleases, that legislation would only be obnoxiousto S. 92 if its real object, true character and real effect-its pithand substance-in the particular instance was found to be restric-tive of freedom.9 When he came to apply his view of S. 92 heproceeded by three stages whose relation to his earlier argument isby no means clear. Banking was a part of trade, commerce andintercourse. The Act prohibits all such business on the part ofthe banks, domestic, interstate and foreign .92 The Act, he said,prohibits the whole of the business irrespective of such matters asdefen e prevention of famine, disease and the like. 3 (Thismight well be questioned, even if the list were kept eius dem generis . Then, as if to clinch the matter, he quoted his own opinionin AustralianNationalAirways v. The Commonwealth

The object of S. 92 is to maintain freedom of interstate competi-tion-the open and not the closed door-absolute freedom of inter-state trade and commerce.Since, he concluded, the Act closes that door and excludes thebanks from the business of interstate banking in Australia , itviolated S. 92. It will be observed that Starke J gave no con-sideration (other than a mere confident denial) to the questionwhether the objectives of the Act could be included in the classof objectives, such as defence, which he admits to justify restric-tion. His eloquent phrase, the open and not the closed door ,which provides the verbal climax of decision, is merely an emptyrestatement of the problem of S. 92 and gives none but emotionalaid to its solution.

The other two judges who concurred in the majority holdingon S. 92 seem at first sight to take a position close to that ofStarke J They too stress the absence of justification of famine,disease and the like, and devote to the objectives of this Bill only

9 Id at 296.91 On the divergence of reasoning between Starke and Dixon JJ despitetheir being often in a dissenting minority together, see infr p. 479, and infra note 155.9 1948) 76 C L R 1 324.93 Quoted by Starke J. ibid. from James v. Cowan, 1932) A. C. 542, 559.94 (1945) 71 C L R 29, 78.

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the observation that there is no suggestion that the private banksare carrying on business in a way that is a menace to the commonwelfare. But whatever inarticulate criterion Starke J. had inmind, which compelled him to say that the TransportCases werewrongly decided as to the nature of the permissible restraint underS. 92,07 must have been rather different from that which led Richand Williams JJ. to regard them as correctly decided.Rich and Williams JJ. were prepared to state their generalposition on S. 92 in these words. The section, they said does notinvalidate legislation regulating the operations of interstate trade It] invalidates legislation which deprives individuals of their

freedom to trade in more States than one.9 8

The essential difficulty is ignored by this formulation. Forunfortunately it is the fact that the statutes which have perplexedthe court have usually done so precisely because in regulating theoperations of interstate trade they deprived individuals of theirfreedom of trade in more States than one. To assert that theformer is constitutionally good and the latter bad is to overlookthe most difficult question at issue-namely, when is a law thatdoes both good, and when is such a law bad? In terms the writerhas discussed elsewhere 90 the distinction may be meaningless, andis certainly indeterminate, and a decision which purports to applyit must have at least latent reference to other grounds.

This very consideration lies behind the debate in the HighCourt on the question whether S. 92 confers rights on individuals.The historical aspect of this question has already been touchedupon. Analytically assuming that the limits of the prohibitionunder S. 92 are known, the effect of that prohibition would be,within those limits, to inhibit governmental action and to guaranteethe freedom of interstate trade, etc., as well as to justify any actionof individuals which, but for the prohibition of S. 92, would becontrary to State or federal statutes, and thus assure the freedom ofpersons. These three effects are really only aspects of the singleproposition that a statute violating the constitutional prohibition

5 Bank Nationalisation Case, (1948) 76 C. L. R. 1 293, per Rich and Willi ms

Enumerated supra note 67. See infra pp. 496-502 for a further treatment ofthe judicial divisions in these cases.9 Bank Nationalisation Case (1948) 76 C. L. R. 1 311.9 Id t 29509 oNE, op cit supra note 11 at pp. 171-4, 185.

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is void. The scope of the prohibition is not affected by the aspectfrom which the prohibition is observed. Once the scope of theprohibition in S. 92 is granted as known, a statute could not simul-taneously conform to it when viewed as a legislative inhibition, andviolate it when viewed as a guarantee of the freedom of persons. Acts , as Lord Wright observed in this connection'00 imply per-so s to perform them or create them , and therefore no criterionof freedom under S. 92 can be based merely on a supposed dis-tinction between the freedom of activities, and the freedom ofpersons which S. 92 protects. It is an illusory distinction.

Yet the judges seem to have assumed the contrary. LathamC.J. was concerned to show 2 that S. 92 is directed to laws madeby the Commonwealth or States and not to actions of individuals.If this means that its net does not catch the conduct of individuals,that is well, but irrelevant. 3 But Latham C.J. proceeds to saythat though the section operates to protect individuals ; it still does not give a cause of action to individuals. ' Yet he admitsin the very same paragraph that one effect of S. 92 is to allow in-dividuals to obtain damages in respect of common law rights ,which but for its unconstitutionality the statute would have takenaway. And if this is accepted, the question whether a breach ofS. 92 creates a cause of action seems to be quite without interestfor this case,' despite the Chief Justice's implicit assumption thatit in some way favoured the arguments of the Commonwealth.

Contrarily, Rich and Williams JJ. admitted'03 that the doctrinethat S. 92 confers a personal right on individuals was an essentialbasis for their view that the prohibition of private banking was adirect (and obnoxious) rather than an incidental (and permissible)prohibition of interstate business. With respect, it is difficult tosee why such an admission was necessary, or indeed what it can

1 James v. Commonwealth, 1936) A. C. 578, 630.101 Or what I have called elsewhere a category of meaningless reference. See

STONE op cit supra note 11 at 171.102 Bank Nationalisation Case, (1948) 76 C. L. R. 1 230.103 And perhaps questionable as an interpretation of S. 92.104 Bank Nationalisation Case, (1948) 76 C. L. R. 1 231, citing James v.

Commonwealth, 1939) 62 C. L. R. 339, 362, and The Riverina Transport Pty. Ltd.v. Victoria, 1937) 57 C. L. R. 327, 341-42.o5 Though, of course, aliter in a case like James v. Commonwealth 1939)62 C. L. R 339, where the question was what remedies are available against violationof S. 92 within its admitted scope106 Bank Nationalisation Case, (1948) 76. C L. R. 1 291.

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The defendants contended that S. 92 is not concerned with theright of an owner of goods to sell them out of the State, and thereforeis not concerned with the ownership of such goods prior to, at the timeof, or subsequent to the passage of goods across State boundaries.Accordingly, the Commonwealth and State Parliaments legislatingwithin their constitutional powers can select the individuals who areto engage in interstate trade. But they must not place any hindrance, burden or restriction on the free passage of the goods of suchindividuals across State boundaries.

They admitted that New South Wales v Commonwealth (TheWheat Case) cited by the Commonwealth here did seem to sup-port it, and were at pains to cast doubt on the correctness of thatdecision in this regard.

If this be the gist, then the problem could be stated equallywell in either of two forms. Does the prohibition of S. 92 extendto interference with liberty of contract and vocation of individualsengaged in interstate commerce, as well as to the physical move-ment of goods, vehicles, vessels and persons across state frontiers,etc. or only to the latter? Or alternatively, do the rights protectedby S. 92 include freedom of contract and vocation, as well as thoseinvolved in the physical movement of goods, vehicles, vessels andpersons, etc., or only the latter? Either way of stating the gist willdo; but in no meaningful sense, and only with the certainty ofgreat confusion, can that gist be stated in terms of the questionwhether S. 92 merely prohibits restraints on interstate trade, com-merce or intercourse, or also confers rights on individuals.

VIII. The Privy Council and Political,Social and EconomicAssessments under S. 92.

In the Commonwealth's appeal to the Privy Council againstthe decision of the High Court, the issue with which this paper isconcerned' 3 resolved itself into the question whether S. 46 of theBanking Act prohibiting the carrying on of banking business byprivate banks was unconstitutional.

2 1915) 20 C. L. R. 54. The Wheat Case involved an emergency measureof the First World War.

3 Strictly speaking, the Privy Council disposed of the appeal on a pro-cedural point, disallowing it on the ground that the leave of the High Court re-quired by S. 74 of the Constitution for appeals on questions of the powers of theStates of the Commonwealth inter se had not been obtained. The Privy Councilproceeded to deal with the merits of the substantial questions here considered ofwhether S. 46 of the Act was within the banking power of S. 51 of the Consti-tution, and if it was, it violated the prohibition of S. 92. The major importanceof the case is on these latter topics.

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The main vices urged were two. First, that S. 46 exceeded thepowers of the Commonwealth above quoted 4 of legislating for thepeace, order and good government of the Commonwealth with re-spect to banking ; second, that it violated S. 92 of the Constitu-tion. S. 92 provides, as has been seen, that on the imposition ofuniform duties of customs, trade, commerce and intercourse amongthe States, whether by means of internal carriage or ocean naviga-tion, shall be absolutely free. The historical context showed thatthe intentions of the draftsmen were directed primarily, if notexclusively, to the removal of obstacles to interstate commerce inthe nature of customs and taxes set up by the respective Statesagainst each other. A half-century of judicial interpretation had,however, left far behind any such modest intentions.

In the first place, as the Privy Council observed in the BankNationalisation Case, - one thing at least was clear after longjudicial controversy, namely that the prohibiton implied from S. 92was not to be limited to a prohibition merely of customs or othermonetary charges. Furthermore, again after many doubts, it hadbeen judicially determined that the prohibition in S. 92 extendednot only against action by the States (as might have been thoughtfrom the historical context) but also against action by the Common-wealth itself. ' The Commonwealth power to legislate with respectto trade and commerce under S. 51(i) was thus counter-balancedto an extent not clearly determined by the injunction in S. 92 that trade, and commerce and intercourse shall be absolutely free .

In this state of the authorities, the presentation of the Common-wealth's case faced some difficulty in the Privy Council, as it haddone in the High Court. For, insofar as it might base its positionon the power to legislate with respect to interstate and foreigntrade and commerce under S. 51(i), it was open to attack under

4 Supra p 460.115 Other grounds were the alleged inconsistency of S. 46 with the maintenance

of constitutional integrity of the States, and with S. 105A of the Constitutionrelating to State-Commonwealth financial agreements insofar as they pre-supposed the continuance of the availability of private bank facilities to theStates and the question of severability. This last question has special interestin view of the unprecedentedly wide severability clause (S. 6), by which Parlia-ment had sought to salvage in advance as much as possible of the Banking Act of1947. The effort was vain.110 Commonwealth of Australia v. Bank of New South Wales, (1949) ArgusL. Rep. 925 (P. C.).117 See supra pp. 470-475.

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NEW YORK UNIVERSITY L W REVIEW

S. 92 as impairing the absolute freedom of trade, commerce andintercourse , leaving for argument on this head only the questionwhether the degree of impairment was such as to violate abso-lute freedom as that term had been interpreted by the courts.

A main effort of the Commonwealth, therefore, was to findsources for its legislative power independently altogether of itspower to legislate with respect to interstate and foreign commerce.There were two such possible sources, of which the principalwas placitum XIII of S. 51, giving power with respect tobanking other than state banking; also state banking extendingbeyond the limits of the State concerned the incorporation of banksand the issue of paper money. Insofar as the Commonwealth mightbe able to rely on this, it would have to take the position that bank-ing was not trade, commerce and intercourse between the States.Two questions, therefore, arose on S. 46:

(1) Was federal legislation on banking to be regarded asoutside the prohibition of S. 92, by reason of the fact thatit was not a part of the trade, commerce or intercourseprotected by that section?

2) Assuming the negative, that is that federal legislation on banking might be within the prohibition of S. 92, byreason of the fact that it was a part of the trade, com-merce or intercourse protected by the section, was theexclusion of all private banking by S. 46 a violation ofthat prohibition?

On the first of these questions, the Chief Justice and McTier-nan J. in the High Court had held that banking, despite its rolein interstate commerce was not itself trade, commerce and inter-course among the states within S. 92, and this was of course amain argument for the Commonwealth on both levels. The ma-jority of the High Court having held to the contrary, however, thiswas a main issue before the Privy Council. This question the PrivyCouncil resolved into the following subsidiary questions which itstated thus:

(1) Is the business of banking included among those ac-tivities described as trade, commerce and intercourse inS. ?

117 The other, which received rather short shrift was S 51 .-x) giving powerwith respect to foreign corporations and trading or financial corporations withinthe limits of the Commonwealth .

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(2) If not, is a prohibition of private banking, involvingthe denial of a choice of banking facilities to those en-gaged in trade and commerce among the states, a restric-tion upon the freedom of that trade and commerce whichis guaranteed by S. 92?118

In short, their Lordships opened up the question whether, evengranted that banking is not in itself trade, commerce or inter-course , the fact that private banking is actually and at presenta facility enjoyed by those engaged in trade, commerce and inter-course among the states, converted the mere prohibition of bankinginto an indirect restraint on trade, commerce and intercourse withinS. 92. Having opened up this second sub-question, their Lordshipsdid not proceed further with it, since they answered the first sub-question in the affirmative.

In doing so, they had to overcome the argument that the words trade, commerce and intercourse within S. 92 being qualified bythe clause whether by means of internal carriage or ocean navi-gation , indicated that the trade, commerce and intercourse con-templated by the section were such as were carried on by thesemeans of physical movement, and that banking was, on its face, ofa different nature. Banking, even interstate banking, for example,could in theory at any rate be wholly carried on by radio and tele-phonic communication involving no physical transportation what-soever, but only book entries within each State.

On the second main question, whether, assuming that bankingAs trade, commerce or intercourse within S. 92, the provisions

of S. 46 of the Banking Act of 1947 involved a kind and degree ofrestraint violating the absolute freedom of S. 92 of the Consti-tution, the Privy Council found itself confronted by certain earlierdecisions of its own, and of the High Court, widely believed to havebeen unfavourable to the contentions of the Commonwealth, inparticular, James v The State of South Australia in the HighCourt, and James v owan in the Privy Council. In James vThe State of South Australia, James, who was a grower and pro-ducer of dried fruits with a business extending beyond the State,challenged the validity of S. 20 of the South Australian Dried FruitsAct of 1924, which empowered the Dried Fruits Board established

8 (1949) Argus L. Rep. 925, 939.11 1927) 40 C. L. R. 1 1927) Argus L. Rep. 336.120 1932) A. C. 542.

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tive action which offends against the Constitution. This, as wehave submitted above, begs the question of substance as to the scopeof S. 92. Analytically speaking S 92 protects individual rightswithin whatever limits are set to its prohibition. But the questionhere raised by the Commonwealth (as it had previously been raisedby Mr. Menzies in James v Commonwealth26 was the question ofsubstance whether the restraints prohibited by S. 92 includerestraints on individual freedom of contract and choice of vocationas well as on the general mobility of the objects of trade, andcommerce, and the physical movement of persons.

Dr. Evatt's argument for the Commonwealth that the test ofan obnoxious restriction under S. 92 was whether the net effectwas to produce an overall decrease in the volume of interstate trade,is really a corollary of the position that the section does notguarantee the freedom of individuals. So long as the total volumeof interstate trade was not decreased, the section would be satis-fied; and the mere fact that some individual trader's liberty ofinterstate trading was restricted or even his property involved insuch trade compulsorily acquired would not be obnoxious to S. 92.

The Privy Council s misunderstanding of the issue as towhether S. 92 protects the freedom of individuals extended to itstreatment of the corollary. They thought the James Cases to becontra for the very irrelevant reason that James an individual hadbeen allowed a remedy for rights violated by statutory restraintswhich were within the prohibited area of S 92. They thought alsothat the total volume argument was unreal and unpractical sincethe effect of interference on total volume was said to be incal-culable, involving speculation as to what would have happened butfor the legislative interference. It is difficult to see why a tribunal,on whose decision there may rest the whole economic destiny of anation should not receive and act upon expert testimony on thequestion whether a restraint would tend to increase or decrease thetotal volume. The economists may disagree, and may be wrongwhen they disagree. And the tribunal may come to a wrong de-cision. That, however, is an inevitable responsibility of statesman-ship, whether on the bench or in parliament.'

12 Supra p. 470. 27 A third ground taken for rejection of the total volume argument turns on

the use of the term intercourse in S. 92, and need not delay us in the text. ThePrivy Council thought that while freedom in relation to trade and commerce

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The Privy Council therefore found it impossible to distin-guish what it took to be the ratio decidendi of all three James Casesfrom the instant case. It is on this point that perhaps the maindivergencies of legal opinion concerning the Banking Case wouldturn. For, as the Privy Council observed, the Commonwealth inthe instant case took as one of its main grounds that the High Courtdecision on S. 46 was inconsistent with the Privy Council de-cisions in James v Cowan12 and James v The Commonwealth.1The Commonwealth's argument rested on certain language in theearlier cases 130 suggesting that the test of obnoxious interferencewith commerce was whether the interference was directed atinterstate commerce as such , thus attaching importance to theobjects with which the interference is entered upon. So, in James vThe Commonwealth 3 ' also, Lord Wright used similar language,stressing the real object of the Act, what it was aimed at, ordirected against. The Commonwealth argued in the instant casethat the Banking Act would not be obnoxious to S. 92 unless its ob-ject or intention was to interfere with interstate trade. The PrivyCouncil rejected this argument on the ground that, granted therelevance of the real object etc. of the interference, this realobject was to be gathered only from what the legislature has seenfit to enact. 2

The Privy Council also rejected the Commonwealth's relianceon language of Lord Wright in James v The Commonwealth, 3insofar as its terms seemed to restrict the scope of S. 92 to freedomof physical movement across frontiers. They did so not merely onthe ground that physical movement was not decisive, but also onthe ground that, on Lord Wright's own view in the same case,might make sense in terms of the total volume argument, intercourse which isplaced on the same level by S. 92 could not be given meaning in terms of thattest. The writer confesses that he is unable to follow the Privy Council's reason-ing on this matter. Intercourse , insofar as it is not repetitious of trade and commerce , would normally refer to the physical motion and locomotion ofpersons across the frontier, and possibly of letters and messages across the frontier.In this sense, it would be susceptible of quantitative estimate of total movements,just as would be the total volume of trade and commerce.

28 1932) A. C. 555.129 1936) A C 578.13 ee supra p. 470. 3 1936) A. C. 578.132 Citing Lord Watson in Solomon v. Solomon, 1897) A. C. 22, 38, and

adopted by Isaacs J in James v. Cowan, 1930) 43 C. L. R. 386, 409.33 1936) A. C. 578, 630.

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interference even before and after the frontier might still be ob-noxious to S. 92

Finally, their Lordships rejected the Commonwealth's argu-ment that Lord Wright in James v The Commonwealth= hadapproved the High Court decision in Vizzard v The King 36 andthe other Transport Cases as applicable also to the Common-wealth s powers, and that on this basis the present High Court de-cision could not stand. The Privy Council questioned the degreeof Lord Wright s earlier approval of Evatt J. s judgment in theVizzard Case 37 and further questioned whether, in any case, therewas any inconsistency with the present High Court judgment in viewof the wide difference of subject-matter and manner of restrictionin the two cases.

At this point, the Privy Council in the Bank NationalisationCase directed its mind to certain distinctions on which earlier caseshad relied, and in particular to the distinction (1) between ob-noxious restrictions affecting trade, commerce, etc. directly andinnocent ones affecting them only remotely or indirectly; (2) be-tween regulation obnoxious to S. 92 and regulation which isproper and valid. Up to this point, it may be noted, the PrivyCouncil had proceeded confidently, as if the matter was to bedecided purely on legal principles, without any regard (if we mayadapt Dixon J. s words) to social or sociological conceptions orpreconceptions.' 13 At the present crucial point in the argument,however, its judgment moved boldly into the social and sociologicalfield, though without much apparent awareness of the change injudicial responsibilities thereby involved.

The four propositions, indeed, of this final section, form almosta perfect illustration of the reluctance of judges to face the im-plications of their creative function, the innocence of the judicialright hand of the doings of the left, or, in Holmes' old phrase, ofthe continued reign of the inarticulate major premise.

The Privy Council's first proposition amounted to this, thatthe term absolutely free in S. 92, did not mean absolutely free,but only relatively free. They correctly admitted that ever since

34 See supra pp 473-475.135 1936) A. C. 578, 622.136 1933) 50 C.L.R. 30 .137 See supra pp. 472-473, and inlr p 496 et seq 38 upra p 59

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Duncan v The State of Queensland the problem of all the caseshad been to define the qualification of that which in the Constitu-tion is left unqualified. Pausing at this point, it is to be observedhow subtly the learned Lords, like Lord Wright before them, 4 understated the matter. For the truth, after all, is not that theword free is left unqualified in S. 92, but that it is qualified bythe most unqualified term which the draftsmen could devise. Thosewho regard the judicial task in the constitutional sphere as merelyto decide according to pre-existing legal propositions (among whomthe writer is not to be counted), might well conclude that a pre-tended application of legal principles which has transformed themeaning of the word absolutely into relatively was a flagrantjudicial usurpation.

In its attempt to rationalise this position, the Privy Counciladmitted that no golden thread ran through the labyrinth. But,they asserted, there were acceptable guides. First, regulation oftrade, etc. is compatible with its absolute freedom . Yet, withrespect, this is no more a guide through the labyrinth than mereassertion of the existence of God is a proof of that existence. Em-phatic denial of the patent contradiction does not prove that itdoes not exist. Second, they said, restrictions which were remoteas distinct from direct did not int

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