AN APPEAL TO THE PRIVY COUNCIL

Grey River Argus, 14 August 1948, Page 5

AN APPEAL TO THE PRIVY COUNCIL

ON AUSTRALIAN BANKING ACT

(Rec. 10.10) CANBERRA, Aug.l3 The Federal Cabinet has decided to appeal to the Privy Council against the High Court's judgment against the Banking Act. Announcing this decision, the Prime Minister, Mr J. B. Chifiey, said that an appeal would be made at the earliest possible date. JUDGES’ COMMENTS The Chief Justice, Sir John Latham, said in his judgment that the Act did not apply to State Ranking, but with that exception it would, it put into full operation, give a monopoly of banking in Australia to the Commonwealth. Legal questions were whether the legislative provisions of the Act were within .the Constitutional powers of the Commonwealth Parliament, and whether the policy they represented was wise, prudent, or desirable. A declaration by Parliament of its purpose in making the law could not be conclusive upon the question of validity. Under Section 22, a creditor, without his consent, could be deprived by statute of his rights against a private bank, ft would mean that the bank had been released of its liabilities to him, ana that the Commonwealth Bank had been substituted as his debtor. # If the Act were put completely mto operation, it would result in there being no central bank, but only the Commonwealth and State Banks. PARLIAMENT'S POWERS

Mr. Justice Starke said: “The Parliament of the Commonwealth is not omnipotent as is the English Parliament, nor has it general authority to make laws for the peace, order and good government of the Commonwealth, as have the States for their territories. The Constitution enumerates the powers of the Commonwealth, and within the framework of those powers must be found the authority of the Commonwealth to encict this Act.” He said no objection to the acquisition of a. business, but the Commonwealth power was not wide enough to include the taking over of liabilities. He could not accede to the construction which the Commonwealth Government had placed upon the Constitution. Mr. Justice Dixon said that the Act was evidently the product of much ingenuity and resource. It could not ( be supported simply on the footing that it was an Act to accomplish the immediate setting up of a Government monopoly in banking, for in point of law the provisions of the Act, if valid, would make other courses possible and authorise the pursuit of other endSc Mr. Justice Rich and Mr. Justice Williams said that the Act could only be completely valid if the Commonwealth Parliament, could pass laws prohibiting banking business other than business by State banks, or compelling any person engaged in banking to carry on that business indefinitely. Parliament could not suppress the State banks, and it would be most unreasonable to construe its power as the. ability • to authorise some State banks to carry on business beyond the limits of their own State, to the exclusion of others. Mr. Justice McTiernan said that only Sections 17 to 20 were held by him to be invalid, and then only because they empowered newly-appoint-ed directors to dispose of the business of a private bank to the Commonwealth Bank and did not secure that the sale would be within Constitutional requirements as to just terms. His conclusions were in line with those of the Chief Justice, except on the question of giving tax concessions in 'the case of a voluntary purchase by the Commonwealth. Bank of a private bank, and not in the case of a compulsory purchase.

Opposition Press Comment SYDNEY, August 13. The Sydney “Daily Telegraph" said: “If the Commonwealth could establish a banking monopoly it would achieve dominating power over al! industry and finance and life in this continent. The judgment has two important means. First, it compels the Commonwealth and the Labour Party to return to the elector for permission to carry out a programme of socialisation. Before the Labour Party can advance this line of its policy it must persuade a majority of the voters and a majority of the States to amend the Constitution to remove the hindrance of Section 92, which forbiids any restraint of trade and commerce between the States. “Second, the judgment reaffirms the vital principle that the Constitution is merely an instrument of the Federation and not the overlord of the States.” The Sydney “Sun” said: “Not only the great majority of the Australian people, but also many of the Labour Party’s most faithful supporters will feel relieved by the High Court’s rejection of the Bhnking Act. The Government’s attempt to push the nationalisation of banking into active law was made in the face of overwhelming public opposition. The great majority of the people of this country do not want extreme Socialism and distrust any further regimentation of their way of life. What caused the greatest misgiving was ' the fact that a Government monopoly of banking would have been hailed with delight by the Communist Party as a perfect prelude to totalitarian, control.”

LONDON, August 12. The “Financial Times” said: “Realisation that finance and banking are the foundation upon which the modern industrial structure is erected is responsible both for the Government’s .attempt to intensify its control of the banks and for the Opposition’s vehement reaction to the move. “Nationalisation of the banks would contain the threat of subordinating every form of industrial activity to political! expediency operating through one all-compelling channel. The temptation to differentiate between a private venture and a governmental agency might be strong, and it would be difficult to prove favouritism. After all, the businessman knows his banker, and the banker knows the businessman’s needs. “The Government’s plan was in part the outcome of resentment against the action of the banks during the depression of the ’thirties. Banking experience has been enlarged since that time, but it is obvious that the Commonwealth Government meant to sacrifice the lessons of banking experience to its own theories for cushioning the country the impact. of external forces. The individual,, in a . society which is still very individualist, still demands that he be left free to guide his business in detail according to his own choice.”

[POINTS FOR BILL SHOWN BY THE PRIME MINISTER Minor Amendments Might be Enough (Rec. 10.40) CANBERRA, Aug. 13 The Prime Minister, Rt. Hon. J. B. Chifley, stated to-day: “1 direct attention to some aspects of the High Court’s banking decision, which,- it is desirable, should be made clear to the public. “A majority of the court has held that certain parts of the 1947 Banning Act conflict with Section Ninetyi two of the constitution, which guarantees inter-State free trade. That, however, is a matter on which there has been a sharp division of opinion among the Justices of the Court. In i the Chief Justice’s opinion, the Banking Act was fully within the principles relating to Section Ninety-two, established by the Privy Council. “Apart from Section Ninetytwo, the fundamental question is the scope, of the national Parliament’s power to make laws with respect to banking. On that point, a majority of the Court have sub- - stantially upheld the major contentions put forward for the Commonwealth by the Attorney-Gen-eral, Dr Evatt, and have rejected the narrow interpretation contended for by the private 'banks.’’ Would Minor Amendments Be Sufficient ? ( (Rec. 11.10) CANBERRA, Aug. 13 . Mr Chifley in. his statement said: “The majority of the High Court also decisively rejected special contentions that were put forward by the three plaintiff States. . “1 am advised that the judgments of the Chief Justice and Mr Justice McTiernan show that a few amendments, and in these no vital provisions, would have enabled those Justices to uphold the Banking Act in all resnects “Copies of the High Court’s judgments are being despatched to Doctor Evatt, in London, and they will reach him early next week I have arranged for the Solicitor-General. Professor Bailey to go to London as soon as possible for consultation with Di Evatt.” Bankers Celebrate SYDNEY, August 13. ' Chief executive officers of the two largest Australian trading banks have denied that any action to challenge sections 18 to 22 of the Banking Act, 1946, is contemplated. Denials that such action is contemplated were made by Mr. S. J. Gandon, acting general manager of the Bank of New South Wales, and Mr. A. S. Osborne, , general manager of the Commercial Banking Company, Sydney. Labour quarters said the Government expected an attack on the 1945 Act. Sections concerned provide trading banks must keep special deposits with the Commonwealth Bank and have been responsible for nearly £300,000,000 being paid into special accounts by the private banks. The view in Canberra is that the I banks reluctantly accepted the 1945 Act as a lesser evil than nationalisation. Melbourne City Council successfully challenged another section of the Act, requiring municipal and State authorities to bank exclusively with the Commonwealth Bank. The full nationalisation scheme as outlined in the Banking Act, 1947, was thereby precipitated. It is said Labour men feel that with nationalisation removed and the 1945 Act proved open to challenge, the States or private banks may move again. Cabinet will not meet specially to discuss the judgment. Most Labour members of Parliament are in favour of an appeal to tne Privy Council. i With only 13 months remaining before the elections, the Government has to consider to what extent it desires bank nationalisation to. be the issue on which that election is decided. Time is all-important for an appeal to the Privy Council, which would keep the banking issue alive well into next year, and the amendment of the 1947 Act, precipitating another struggle in Parliament, would have much the same effect. Bank officials said fears of unemployment had passed and that the banks “were back in -.business again with a long-term charter.” A newlyformed Bankers’ Club in Sydney was the scene of festivities las 1” nightGeneral managers of most banks were in Sydney for the day, those in charge of Melbourne banks coming specially for the occasion. In many banking premises kegs of beer appeared after closing time. In Melbourne, telephoned congratulations jammed the lines of bank managers. In the streets, news stands were dressed with posters reading, “Bank Bill Decision,” .but the newsboys were yelling out: “Results of lottery !”