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B. Trade.

The power of the Commonwealth and States in matters of trade, commerce, and intercourse is subject to an important restriction in section 92, which must be considered after


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we have dealt with the nature of the power of the Commonwealth under section 51 (i.) over trade and commerce with other countries and among the States.

Trade” and “Commerce.”—These terms are used in the British North American Act, 1867, and the necessity of putting some limitation upon words of such wide import has been one of the great difficulties of construing that Act. In the Commonwealth Constitution, however, they are cut down by their accompanying words, “with other countries and among the States.” The power of the Parliament, therefore, is limited to foreign and inter-state trade and commerce. It is impossible to define such a power exactly. While its nature points to fiscal and economic regulations, and particularly to the removal of those barriers to trading intercourse which arise from the existence of separate political communities, it is not limited by those objects. In Gibbons v. Ogden,note Marshall, C.J., said: “The subject to be regulated is commerce; and our Constitution being, as was aptly said at the bar, one of enumeration and not of definition, to ascertain the extent of the power, it becomes necessary to settle the meaning of the word. The counsel for the appellee would limit it to traffic, to buying and selling, or the interchange of commodities, and do not admit that it comprehends navigation. This would restrict a general term, applicable to many objects, to one of its significations. Commerce undoubtedly is traffic, but it is something more—it is intercourse. It describes the commercial intercourse between nations and parts of nations in all its branches, and is regulated by prescribing rules for carrying on that intercourse.” The Commonwealth Constitution uses the terms “trade and commerce”; but the term “trade,” while it may serve to recall the regulations of trade which belonged to our old mercantile system, does not appear to extend or alter the power of the Parliament.note




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Some assistance as to the extent of the power may be found in the Constitution itself, which declares that “the power of the Parliament to make laws with reference to trade and commerce extends to navigation and shipping, and railways the property of any State” (section 98); that Parliament “shall not by any law or regulation of trade or commerce abridge the rights of a State or the residents therein to the reasonable use of the waters of rivers for conservation or irrigation” (section 100); that Parliament “may by any law with respect to trade or commerce forbid as to railways any preference by a State or the authority constituted under any State” (section 102). The power therefore includes the regulation and control of transport and communication between the States, and the means thereof, whether they are natural or artificial, whether in public or in private hands. On the other hand, the inclusion in section 51 of “banking,” “bankruptcy and insolvency,” “bills of exchange,” and certain other matters as separate and independent heads of legislation, indicates that “trade and commerce” does not embrace the whole of what is called “commercial law.”

“Among” is “intermingled with” (per Marshall, C.J., in Gibbons v. Ogden). The power of the Parliament does not extend to making a general and uniform law on all matters of trade and commerce, however desirable such a law may appear to be; thus, in the United States, a national combination to control the production of an article, although its effects were experienced throughout the country, was held not to be a matter of inter-state commerce, and therefore could not be regulated or forbidden by Congress.note

“The commerce of a State which Congress may control must in some stage of its progress be extra-territorial. It can never include transactions wholly internal, between citizens wholly of the same community, or extend to a polity and laws, whose ends and purposes and operations


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are restricted to the territory and soil and jurisdiction of such a community.”note

Extent and Limitations of the Power.—Sections 98 and 102 (with section 104) have been already referred to as expressly asserting or extending the power of the Parliament under “trade and commerce”; and on the other hand, sections 99 and 100 define or restrict the power of the Parliament. Section 99 provides that “The Commonwealth (i.e. the Parliament) shall not by any law or regulation of trade, commerce, or revenue give preference to one State or any part thereof over another State or any part thereof.” This is an adaptation from the United States Constitution section ix., clause 6, as judicially construed in the “Passenger Cases.”note Preferences by laws of a State are not within the prohibition; they are sufficiently covered by the general power of the Commonwealth over “trade and commerce”; the special power of “The Parliament,” and the powers of the Inter-State Commission.

The Power of the ParliamentExclusive or Concurrent. —After long controversy, the Supreme Court in 1851 decided in the case of Cooley v. Board of Wardens of the Port of Philadelphia note that the power of Congress to regulate commerce with foreign nations, and among the several States, was necessarily exclusive whenever the subjects of it are national in their character, or admit only of one uniform system or plan of regulation. Where the power of Congress to regulate is exclusive, the failure to make express regulations indicates its will that the subject shall be left free from any restrictions or impositions, and any regulation of the subject by the States, except in matters of local concern only, is repugnant to such freedom.

But the power to regulate commerce covers a vast field, containing many and exceedingly various subjects, quite unlike in their nature—some demanding a single uniform rule, others as imperatively demanding diversity; in the latter case, in the absence of legislation by Congress, the State


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Legislature may properly make provision, though the matter is one of inter-State commerce. Finally, State legislation for the protection of the life, liberty, safety, health, comfort of its people, and for the protection of their property—the exercise of what is known as the “police power”—is not invalid merely because it incidentally affects inter-State commerce, if it does not extend beyond what is reasonably necessary for its legitimate purpose. But in all cases, of course, the legislation of the State, so far as it affects inter-State commerce, is liable to be over-ridden by an exercise of the paramount power of Congress.note

The main difficulty of these principles lies in their application—in determining what matters are of national concern requiring one uniform set of regulations, and what are proper for local regulation. But the statement of the difficulty suggests a question, which in a new Constitution demands consideration. It has been pertinently observednote that “the question, whether or not a given subject admits of only one uniform system or plan of regulation, is primarily a legislative question, not a judicial one. For it involves a consideration of what on practical grounds is expedient, possible, or desirable; and whether, being so at one time or place, it is at another. … It is not in the language itself of the clause of the Constitution now in question, or in any necessary construction of it, that any requirement of uniformity is found in any case whatever. That can only be declared necessary in any given case as being the determination of some one's practical judgment. The question then appears to be a legislative one; it is for Congress and not for the Courts—except indeed in the sense that the Courts may control a legislative decision so far as to keep it within the bounds of reason, of rational opinion. If this be so, then no judicial determination of the question can stand against a reasonable enactment of Congress to the contrary. …


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It would seem to follow that the Courts should abstain from interference except in cases so clear that the legislature cannot legitimately supersede its determinations; for the fact that the legislature may do this in any given case, shows plainly that the question is legislative and not judicial. … If it be thought that Congress will very likely be dilatory or negligent, or that it may even purposely allow and connive at what should be forbidden—that is quite possible. But the objection is a criticism upon the arrangements of the Constitution itself, in giving so much power to the legislature and so little to the Courts. It is to be observed, however, that the great object which the makers of the Constitution had in view as to this subject, was to secure power and control to a single hand, the general government, the common representative of all, instead of leaving it divided and scattered among the States; and that this object is clearly accomplished” by the control of Congress. These are weighty reasons against the test applied by the American Courts, and may well prevail in a political system where the courts have been long accustomed to the supremacy of the legislature. Our Courts are not likely to declare any power of the Commonwealth Parliament to be an exclusive power, unless they find good warrant for it in the Constitution itself.

Freedom of Trade and Commerce.—The section in the Constitution which bears directly on the matter is section 92, whereby

“On the imposition of uniform duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free.” This section was commended to the Convention as “a bit of layman's language on which no legal technicalities can be built.” The case was an unfortunate one for the exhibition of the layman's art, for of all vague and varying words in the political vocabulary, “free” is probably the worst. Here we can do no more than indicate a few of the difficulties that beset the application of the section.




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The most obvious meaning is that which springs from the association of the clause with the imposition of uniform duties, and the declaration that the power of the Parliament over customs, excise, and bounties shall be exclusive. Noscitur a sociis. “Absolutely free” would therefore mean that commerce among the States was to be free of all duties of customs and excise; and, as the power of the States to impose such duties has been already taken away by section 90, section 92 would operate as a restriction upon the Commonwealth Parliament alone. For such a limited application, some support might be found in the observations of Marshall, C.J., in Barron v. Mayor of Baltimore,note “that the limitations on power, if expressed in general terms, are naturally, and we (i.e. the Supreme Court of the United States) think necessarily, applicable to the government created by the instrument. They are limitations of power granted by the instrument itself; not of distinct governments framed by different persons and for different purposes.” But the section is associated with others, which, while expressly conferring power on the Commonwealth, are expressly taking away or saving the powers of the States, not in matters incidental or collateral, but in a matter vital to the Commonwealth. In such a case it is reasonable to suppose that the section must have a wider interpretation; that it operates upon the Commonwealth Parliament and the States; and that at the least the absolute freedom of trade, commerce, and intercourse is impaired by any charge (not merely of customs and excise duties), by whatever name it may be called or on whatever pretence it may be levied, which is in substance a tax (in the broad sense of the word) upon the intercourse of persons, or the commerce in goods among the States. Charges for services rendered are not ejusdem generis; they are in promotion, not in hindrance of intercourse. Charges for railway services, reasonable tolls for the advantage of ports and improved waterways, may be imposed. But a charge for services may become a tax if the charge is unreasonable, or if it is used


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to the prejudice of intercourse among the States. Discriminating and preferential railway charges are dealt with in section 102, and a question may well arise whether they are to be exclusively dealt with under that section, or fall also within the control of the judicial power.

It is not clear that “absolutely free” in section 92 applies to obstructions or restrictions upon commerce which are not in the nature of a tax. It is natural to turn to the American decisions for aid in this matter. There we find that the expression “free from any restrictions or impositions,” and similar phrases, are used by the Courts in describing the total inability of the States to regulate inter-State commerce. Thus, in Robbins v. Shelby County Taxing District,note the Supreme Court of the United States, stating the doctrine of constitutional law on the subject of the inter-State commerce, says: that “where the power of Congress to regulate is exclusive, the failure of Congress to make express regulations indicates its will that the subject shall be left free from any restrictions or impositions; and any regulation of the subject by the States, except in matters of local concern only, is repugnant to such freedom.” Again, in re Rahrer,note the Court says: “The laws of Iowa, under consideration in Bowman v. Railway Company, 125 U.S. 465, and Leisy v. Hardin, 135 U.S. 100. … amounted, in fact, to a regulation of (foreign or inter-State) commerce. Hence. … it was held that, so long as Congress did not pass any law to regulate it specifically, or in such a way as to allow the laws of a State to operate upon it, Congress thereby indicated its will that such commerce should be free and untrammelled, and therefore the laws of Iowa referred to were inoperative in so far as they amounted to regulations of foreign or inter-State commerce. It followed as a corollary that when Congress acted at all the results of its action must be to operate as a restraint upon that perfect freedom which its silence ensured.” In other words, “freedom” means absence from all interference. But in


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the same case the Court is careful to point out that the Constitution does not guarantee the absolute freedom of inter-State commerce, but only protects it from the embarrassment of diverse regulations by the States by confiding the powers of regulation exclusively to Congress. The Commonwealth Constitution does the very thing which the United States Constitution does not do. By a clause which binds both the Commonwealth Parliament and the States, it provides that trade, commerce, and intercourse shall be “absolutely free.” But if inter-State commerce is to be absolutely free from all interference or regulation, what becomes of the power confided to the Commonwealth Parliament to make laws with respect to trade and commerce among the States?

It may be that section 92 expresses as to the States the doctrine of non-interference with inter-State commerce, which has been declared in the United States to arise by necessary implication as to matters of a national character. If so, it must apply unequally to State and Commonwealth; and the latter, while it may be restrained by it from taxation, prohibition, and perhaps from all regulation, the essential and unequivocal nature of which is to impede commerce, may for the rest operate freely upon the matter. And, of course, it is hardly a correct assumption that every regulation of commerce, even by the State, is an intrusion upon freedom of commerce, a truth which is recognized in the sufferance of the States to deal with those matters of inter-State commerce which admit of local regulation—“aids to commerce,” as they have been called.note

The embodiment of the United States doctrine of freedom would still leave it open to the States to make laws under its police power for the life, safety, and health of its citizens, though such laws might incidentally affect foreign or inter-State commerce.note




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It is to be noticed that section 92 only becomes operative on the imposition of uniform duties of customs; and during the time preceding such imposition the Commonwealth is, like the United States, without express provision on the subject.

It is submitted that in the Commonwealth the mere grant of the commerce power to the Parliament does not make it in any way exclusive, and that the States may, until uniform duties are imposed, freely deal with inter-State commerce, except so far as they are expressly prohibited (as under section 117), or as may be inconsistent with the legislation of the Parliament. After uniform duties are imposed, the further restraint will depend on the exclusive power of the Commonwealth over duties, and on the construction put upon section 92. The Commonwealth Constitution, unlike the Constitution of the United States, makes a particular enumeration of exclusive powers; and it is reasonable to suppose that if the commerce power had been intended to be exclusive, it would have been included in the enumeration.

The Inter-State Commission.—Section 101. There shall be an Inter-State Commission, with such powers of adjudication and administration as the Parliament deems necessary for the execution and maintenance within the Commonwealth of the provisions of this Constitution relating to trade and commerce, and of all the laws made thereunder.

The nature of the Commission is indicated in the clause; it is to combine the functions of adjudication and administration. It was suggested by the Inter-State Commerce Commission in the United States and the Railway and Canal Commission in the United Kingdom, and may be


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expected to exercise powers of each of those bodies. The Inter-State Commerce Act, 1887 (U.S.), provided for the appointment of a Commission to carry out the objects of the law, which were in the main to secure just and reasonable charges for transportation; to prohibit unjust discrimination in the rendition of like services under similar circumstances and conditions; to prevent undue or unreasonable preferences to persons, corporations, and localities; to inhibit greater compensation for a shorter than for a longer distance over the same line; and to abolish combinations for the pooling of freights. The Commission is a special tribunal, whose duties, though largely administrative, are sometimes semi-judicial; but it is not a Court empowered to render judgments and enter decrees.note It investigates facts; reports and makes orders upon them; but to enforce those orders it must resort to the Courts, and the Courts may investigate the whole merits of the controversy, and form an independent judgment.

The Railway and Canal Commission in England, as constituted by the Act of 1888, is empowered to order the Railway Companies to obey the provisions of numerous Acts of Parliament, under which they are bound, amongst other things, to afford reasonable facilities for traffic; and are forbidden to give undue or unreasonable preference or advantage in favour of any person, company, or description of traffic. Such undue preference may arise from a difference in treatment to any trader or class of traders, or to the traders in any district, in respect of the same or similar merchandise, or of the same or similar services. It may intervene, not merely at the request of an individual alleging the infringement of his right, but also on the complaint of the Attorney General, the Board of Trade, and various local authorities or associations of traders or freighters, without proof that the body is aggrieved by the matter complained of, if the Board of Trade has certified the body to be a proper one. In addition to ordering the Company to redress the wrong for the future, the Commission


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may award damages to a person aggrieved in full satisfaction of any claim which the party would have had by reason of the matter of complaint. The Commission has now full power to carry out its awards, and is armed with the powers of a court of record.

How far the Inter-State Commission will resemble the one body or the other can be determined only after it is appointed, for while its powers cannot extend beyond the execution and maintenance of the provisions of this Constitution relating to trade and commerce and of all laws made thereunder, its only powers within those limits are such as the Parliament thinks it necessary to confer upon it. There is of course no means of compelling the Parliament to confer any powers upon the Commission, but it is to be noted that the power of the Parliament to forbid railway preferences as undue or unreasonable, or unjust to any State, is dependent upon a finding to that effect having been made by the Commission (sec. 102). It is well settled in England that what is undue or unreasonable is a question of fact to be determined in each case, by looking at the matter broadly and applying common sense. The fact that railways in Australia are the property of the State, and that they have been constructed in many cases for quite different reasons than immediate gain or profit from their traffic, leads to the enactment of two provisions in the Constitution:

1. That, in determining whether a preference or discrimination is undue or unreasonable or unjust to any State, regard is to be had to the financial responsibilities incurred by the State in connection with the construction and maintenance of its railways. (Section 102.)

2. Nothing in this Constitution shall render unlawful any rate for the carriage of goods upon a railway the property of a State, if the rate is deemed by the Inter-State Commission to be necessary for the development of the territory of the State, and if the rate applies equally to goods within the State and to goods passing into the State from other States. (Section 104).

The questions that have arisen in the past as to railways


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in Australia, and therefore presumably the class of case with which the Commission will be mainly concerned, are singularly different from the typical preference and discrimination cases in England and America. Speaking generally, it may be said that the problem in England and America has been how to protect the trader and the passenger against various kinds of oppression by the Railway Companies, and to discourage combination and to encourage competition. In Australia, the question has been rather how to reconcile the interests of the railway proprietors—the Governments—each of which has deemed itself entitled to a monopoly of certain traffic. It is only fair to add that cases of favour or oppression of individuals, which account for much of English and American legislation, have been conspicuously absent in Australia. Favour of localities, however, is not unknown—the anxiety of New South Wales and Victoria has been to bring the trade to their respective capitals as much as to secure traffic for their railways.

The powers of the Inter-State Commission may extend beyond the railways and transportation. They may for example be called on under section 99 to determine whether the Commonwealth has by any law of trade or commerce given preference to a State or part thereof over another State or part thereof; or, under section 100, to decide whether the Commonwealth has abridged the right of a State or resident therein to the reasonable use of the waters of rivers for conservation or irrigation. It is submitted, however, that these matters will still be within the cognizance of the Courts so far as the redress of individual grievances is concerned, as by the award of damages in proper cases. Possibly the Parliament may be able to confer upon the Commission the power to award damages to a person aggrieved which the Railway Commission in England now enjoys; but it is conceived that a person aggrieved could not be compelled to resort to the Commission, and it may be doubted whether the recovery of damages in the Inter-State Commission would be a bar to


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an action in the Courts, though of course it would affect the amount recoverable. The Inter-State Commission seems to be in the position of some other bodies which have been referred to—it has mixed administrative and judicial powers, but it is not a court. It belongs not to the “judicial power,” but to the executive—the very terms which describe its possible functions for “the execution and maintenance …. of the provisions of this Constitution,” relating to trade and commerce, “and of all laws made thereunder,” recall the terms in section 61 establishing and vesting the executive power.

Section 103. The members of the Inter-State Commission:

i. Shall be appointed by the Governor-General in Council;

ii. Shall hold office for seven years, but may be removed within that time by the Governor-General in Council on an address from both Houses of the Parliament in the same session praying for such removal on the ground of proved misbehaviour or incapacity;

iii. Shall receive such remuneration as the Parliament may fix; but such remuneration shall not be diminished during their continuance in office.

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