Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Thursday, 12 December 1912


Senator PEARCE (Western AustraliaMinister of Defence) . - It is somewhat interesting to notice the attitude of the Opposition to- these measures, and to let the people of Australia know exactly what it is. I think that it can be boiled down into a few words, although it has been expressed in very many words by Senator Gould, and by speakers in another place. In brief, they say to the people, " We will do our best to prevent you from having these enlarged powers so long as you return a majority of Labour members to the Federal Parliament."


Senator St Ledger - Who said that?


Senator PEARCE - Mr. Irvinehas said it, and in his address this morning Senator Gould pointed out that there was a danger as to the use which could be made of the powers, and he quoted the attitude of cer-, tain Labour senators, and particularly of myself. Senator Millen also quoted me and other honorable senators to show' the extreme use we might make of the proposed powers. I am justified in saying that if their opposition is directed to anything at all it is practically a threat to the people of Australia. " It may be necessary that there should be increased powers given to the Commonwealth Parliament, but we will do our best to prevent it from getting them so long as you return a. majority of Labour members."


Senator St Ledger - Did not Mr. Irvine say something about the form of, your demand ?


Senator PEARCE - In his speech, Sena> tor Millen attempted to make great use of the recent Presidential election' in the United States of America. He said that ' it was fought out on the question of the increase of Federal or State powers. He quoted ex-President Roosevelt as the champion of increased Federal powers, arid the president-elect, Dr. Woodrow Wilson, as tine- champion ©f State authority. He said that it. was the primary factor on which the election was fought' out. I have here a newspaper called Progress, which circulates in Melbourne. The front page of its issue of 2nd December contains a photograph of Dr. Woodrow Wilson, and underneath appears the following quotation from his speech accepting the nomination of the Democratic party -

We must break down that great dam that runs around all our coasts - the restrictive Tariff that Hems- us in, that chokes us, that smothers us.

That was- the dividing line' between himself and the other candidates. That was the main principle put forward by his party, the Democratic party, and that is borne out by the platform of the party of which- he was the selected candidate.

The first and principal plank of the platform refers, to the Tariff, and is as follows : -

We. declare it to be a fundamental principle of the Democratic party that the Federal! Government, under the Constitution, has no' right or power to impose or collect Tariff duties; except for the purpose of revenue, and" we demand that the collection of such taxes, shall be limited to the necessities of government, honestly and economically administered.

That is the first and' principal plank of their platform,, and it is the first and principal plank of the. platform on which ©t. Wilson was elected. How was that viewed by the' party- journals, who are the political sponsors of honorable senators opposite? Commenting on the victory of 0r. Wilson, in a leading article of 6th November, the Melbourne Argus says -

His victory is unquestionably a crushing blow to. the cause of high protection.

Vet Senator Millen would have the Senate md the people of the Commonwealth to

Relieve that the question on which that ejection was fought out was that of State versus Federal powers.


Senator Fraser - He made a definite statement that he would not interfere with the existing Tariff.


Senator PEARCE - I dare say that he did. ' It is characteristic of a certain class crf politicians to make statements which leave them a way out. I have quoted from the platform of the party that he represented, from his speech in accepting the nomination of the party, and from the greatest Conservative journal in Australia, hs to the principles on which the Presidential contest in America was fought. During, the debate we have had many references to the increased cost of living, and honorable senators opposite have attributed it to the increase of wages and to Labour legislation. They say that it is coincident with the rise and establishment of Labour government. In this connexion, the following statement from Mr. Woodrow Wilson's speech, when1 accepting the nomination of his party, is very interesting.


Senator Rae - And there are no Labour Governments in America.


Senator PEARCE - There are no Labour Governments and no Labour members there. Mr. Woodrow Wilson said -

It is not as easy for us to live as it used to be. Our money will not buy as much. High wages, even when we can get them, yield us no great comfort. We used to be better off with less, because a dollar could buy so much more. The majority of us have been disturbed to find ourselves growing poorer, even though our earnings were slowly increasing. Prices climb faster than we can push our earnings up. Moreover, we begin to perceive some things about the movements of prices that concern us very deeply, and fix our attention upon the Tariff schedules with a more definite determination than ever to get at the bottom of this matter. We have been looking into it, and we begin to see very clearly what at least some of the methods are by which prices are fixed. We know that they are not fixed by the com-' petitions of the market or by the ancient lawof supply and demand -

That is very pertinent to certain remarks made by Senator Gould - but by private arrangements with regard- to what the supply should be, and agreements amongst the producers themselves. Those who buy are not even represented by counsel. The high cost of living is1 arranged by private understanding. 1 put that forward as an answer to the statement that Labour legislation is accountable for the increased cost of living. Coming to the Bills before the Senate, I desire that my remarks shall not be merely criticism destructive of what has been urged from the other side. 1 think that those who support these measures are under an obligation to make out a case for their adoption. First of all, as regards the commerce power: It will be difficult for any one to controvert the statement that commerce is essentially Federal in its character. Whilst we may, by artificial lines, cut up a country into geographical parts, name them separately, and even have different forms of government for the different parts, the commerce within all the separate areas will be Federal in character, and, if they are occupied by different nations, will be international in character. Tariff legislation, and the imposition of differential railway rates, go to show that these are merely artificial restraints imposed upon the international character of commerce, in order to confine it for the special benefit of those residing within a particular geographical area. The fact that nations, for their protection or aggrandizement, adopt these artificial methods is itself a recognition of the international character of commerce. If we are to deal effectively with commerce, our legislation must, perforce, be as Federal in its character as is the commerce with which it purports to deal. Having stated that general proposition, it devolves upon me to give instances where our existing Constitution hampers and prevents the passage of legislation for the benefit of the people within the geographical area known as the Commonwealth of Australia. This Commonwealth Parliament decided that, in the interests of the people of Australia as a whole, a law should be passed dealing with commerce in goods imported from the outside world for sale in the Commonwealth. A practice had grown up, especially in connexion with textiles, under which goods sold in Australia as woollen goods contained very little wool. Goods sold as wool were found to contain cotton as well as wool; and in many other ways imported goods were incorrectly and dishonestly described for purposes of sale. lt was considered essential that, in the interests of the people, this Parliament should pass legislation enacting that these goods should be honestly and accurately branded, so that purchasers of them might know what they are purchasing. We accordingly passed the Commerce (Trades Descriptions) Act. Under that Act, when goods are received at the Customs House, "if they are woollen they must be marked as -such. If they contain cotton, it is under our Act a crime to describe them as woollen. They must be marked as being wool and cotton goods. If they are wholly cotton goods, they must be marked as such. That Act had an immediate effect. The labels attached to imported goods had in many cases to be taken off, and were taken off and new labels had to be printed and attached to the goods, honestly describing what they were.


Senator Fraser - No human being would object to that.


Senator PEARCE - Certainly not. As "Senator Fraser does not object to that, he should be prepared to go further, and see that the people of Australia really get the benefit oof .the legislation that we have passed. iVe have to consider what may happen . when the High Court rules that our Federal law cannot have effect beyond the Customs House. Under our law. as interpreted by the High Court, what happens is this : When a bale of goods is removed from the Customs House to a shop, the shopkeeper can remove the label accurately and honestly describing the nature of the goods, and attach to the goods any label he pleases, and our Federal law cannot touch him. In that way the object and purpose of the Commerce (Trades Descriptions) Act is absolutely defeated.


Senator St Ledger - The State law could deal with that.


Senator PEARCE - Of course, a State law could deal with that, but the laws of several of the States do not deal with it, and attempts made to pass such legislation in the State Parliaments have hitherto been successful in only two or three of the States.


Senator Fraser - The Victorian Pure Foods Act is admired all over the world.


Senator PEARCE - That may be so, but the fact remains that all the States have not passed legislation similar to our Act, and in some of the States the practice to which I have directed attention is being continued. In the Commerce (Trades Descriptions) Act we passed a provision that foodstuffs containing deleterious substances should be 'prohibited from coming into Australia, or if permitted to be introduced, should bear on the package containing them a statement of the substances of which they were made, so that people, in purchasing them, would know that they were buying foodstuffs of a deleterious character. The Federal power has been effective to prevent the importation of deleterious foodstuffs, but what may happen, and has happened in more than one case, is that the goods, having been stopped at the Customs Houses, the manufacturers establish works within one of the States, commence the manufacture of the prohibited goods, and distribute them throughout the Commonwealth, and our Federal law is in that case impotent to prevent them. Senator St. Ledger may tell me that the State Parliaments can also deal with that matter, hut my point is that they cannot as effectively deal with it as it might be dealt with by a Federal law if its operation extended beyond the Customs House, and applied throughout the Commonwealth wherever such goods were manufactured and sold. These facts are on record, and I may say further, that members of the State Governments who are bitterly opposing the proposed extension of the powers of the Federal Parliament, have themselves recognised in their annual conferences the necessity for uniform legislation upon these matters. I quote the following from page 6 of the report of the proceedings of the Inter-State Conference held in Melbourne this year : -

Resolved- That the Chief Medical Officer of New South Wales (Dr. Ashburton Thompson) be constituted a Royal Commission for each State in turn for the purpose of making recommendations with the view to uniform legislation for the standardization of Australian manufactured food products.

Why should the people of Australia be forced to the necessity of having six separate State Parliaments taking independent action to secure uniform legisation when, if they chose, they might take for themselves the power through their National Parliament to pass one Act which would operate all over Australia. I quote the following resolution from page 7 of the report of the Inter-State Conference : -

Resolved - That the representatives of New South Wales and Victoria confer, with a view of agreeing to the provisions of a Bill to regulate the manufacture and sale of footwear for submission to the Parliaments of all the States.

In these two resolutions we have a recognition Of the Inter-State character of commerce, and of the fact that State legislation upon these matters can give no satisfactory results. As a matter of fact, the only result of State legislation dealing with such matters is to improve the conditions of the people of a particular State at the expense of the manufacturers of that State, and for the benefit of the manufacturers of other States in which no such legislation exists.


Senator St Ledger - The people do not ask us to do it; they ask their State Parliaments to do it.


Senator PEARCE - I am not concerned with that. I am pointing out the fact that in asking that it should be done the representatives of the States at the InterState Conference have recognised the necessity for uniform legislation of this description. I wish to quote in this regard no less an authority than Mr. Glynn, who was Attorney-General of the Fusion Government, and when occupying that position went into this question, and embodied his views in a Memorandum relating to the Australian Industries Preservation Act and the industrial power, together with suggestions " for the amendment of the Constitution in relation to trusts and industrial1 matters." That is to say, a member of the present Opposition, who will go before the people and ask them to reject this very power, is the gentleman whose observationsI am now about to quote. After giving an historical account of the laws dealing with corporations in the United States, and the results which have followed from thoselaws, I find that in paragraph 7 of hisMemorandum he says -

It will be seen from these references that in the United States of America, where combinations and monopolies are more numerous and extensive in their operations, the ineffectiveness, of divided power is felt, and greater Federal control is advocated by men who have no desire to unnecessarily narrow the sphere of the States. That the power of Congress is as great in respect of Inter-State, as it is admitted to be in respect of external trade, has been questioned ; but there can be no reasonable doubt that the power of the Commonwealth Parliament under section 51 (i.) of the Constitution extends to the prevention of any interferences with the absolute freedom of trade and commerce between the States provided for by section 92.

The point is not the plenary character of "the Federal power within its acknowledged sphere, but whether, in the interests of the public, that power should extend to legislation in respect of contracts or operations in restraint of trade, whether Inter-State and external or intra-State, of corporations, or corporations and persons.

Among the considerations that affect opinion in the matter are the difficulties of divided, and the advantages of Federal control, and the magnitude of the evils to be dealt with. As to these, a few remarks may be made.

No State Acts in the matter exist, or if passed, could effectively meet the necessities of the case. It is clear that all Acts, Commonwealth and State, while covering operations of persons or companies in different fields of jurisdiction, should be similar in purport or terms. Otherwise the lawfulness of operations would depend on locality, and similar facts might be made the basis of different charges, under the State and the Commonwealth Acts respectively. This would mean the application, to the same Acts, of conflicting views or standards of policy or morals, different rules as to proof, on the same evidence, conviction under one jurisdiction and acquittal under another, and in States without any legislation in the matter, freedom for the operations of the offending persons or companies except so far as controlled by common law.

As regards administration, the difficulties in securing uniformity, so desirable in the case of States presenting similar conditions, would be great. It is clear that, to the extent to which concert in the enforcement of the Acts of the States and Commonwealth was not attained, the attempts to prevent or suppress the evils would be ineffective.

That is Mr. Glynn's comment upon the situation with which I have been dealing.

I wish now to say a few words in regard to the Bill which proposes' to alter the Constitution by inserting after paragraph xxxv. of section 51 the words -

Conciliation and arbitration for the prevention and settlement of industrial disputes in relation to employment in the railway service of a State. It is said that this power is intended to take away from the State Parliaments and State Governments the means of fixing wages; and it is argued that we are attempting something in the nature of a revolution. It is alleged that we are taking away the sovereign power of the people of the 'States to fix the wages of their own railway servants. Let us look at the facts. There 'is not a State in Australia to-day whose railways are not controlled by Railways Commissioners. In the Railways Commissioners Acts of the States, autocratic power is given to those officials for the very purpose of removing the railways from political control. Those Commissioners practically stand, as far as concerns their relation to their employes, in exactly the same position as do private employers towards theirs.


Senator Fraser - No; they can be suspended.


Senator Lt Colonel Sir Albert Gould - Subject to an alteration of the Railways Commissioners Acts.


Senator PEARCE - Subject, of course, to an amendment of the Acts under which they are engaged.


Senator Millen - Subject, also, to Parliament finding the money.


Senator PEARCE - The State Parliaments have not shown the slightest disposition to interfere with those Acts or to take away from the Commissioners their powers, except in one regard. In the States of New South Wales and Western Australia what has happened? The Governments there have established industrial tribunals, and the railway employes of those' States have been given the right to appeal, with respect to rates of wages fixed by the Railways Commissioners, to those industrial tribunals.

Senator Lt.-Colonel SirAlbert Gould. They are agencies of the States.


Senator PEARCE - Will the honorable senator tell me that the Governments of those States will not respect the wages fixed by those tribunals? Will any honorable senator allege that the position can, or will, arise under which, when an industrial tribunal which a State has created, and to which these matters are relegated makes an award, the State Parliament will say, " Although you have made an award, we will not find the money ' ' ? We know, as a matter of actual fact, that they will do nothing of the kind. What is the difference between this proposal and that? Simply this - that the tribunal to be established to hear disputes of this character, instead of being a State Court created by a State Statute, will be a Federal Court created by a Federal Statute.


Senator Millen - That makes all the difference.


Senator PEARCE - There is not the slightest possibility of a suggestion that any State Parliament will refuse to honour the award of an industrial tribunal which is established by the Commonwealth, any more than they would refuse to honour the award of an industrial tribunal established by themselves.


Senator Millen - The honorable senator has not shown any warrant for interfering with State functions.


Senator PEARCE - The warrant is this : The railways of this country are essentially Inter-State in their operations. The trade they carry is essentially Inter-State. Although a dispute may arise within a State, and may be absolutely confined to that State - although it may have no relation to any Inter-State issue - the very fact of the strike or lock-out occurring will have an effect and be felt on the railways of all the other States that happen to be linked up with the railway system of the State in which the dispute occurs. If continued long enough, the dispute will undoubtedly paralyze the railway systems of the neighbouring States, as far as the main trunk lines are concerned. I will give a case in point. A few years ago there was a strike on the railways of Victoria. It lasted only four days. But within that short space of time the railways of South Australia and New South Wales were vitally affected. No goods could be carried over the railway from Melbourne to Sydney; no passengers could be carried from Melbourne to Adelaide. Therefore, the New South Wales railways from Albury to Sydney, and the South Australian railways from Serviceton to Adelaide, were vitally affected by the Victorian dispute. Nevertheless, though the other States suffered, they could not do the slightest thing to effect relief, or to bring about a settlement.


Senator Millen - If this measure had been in force then, the strike would have spread from State to State.


Senator Fraser - And would have lasted for months.


Senator PEARCE - I am pointing out what the effect of a railway dispute may be. The very fact that you allow a dispute to exist on the railways qf a State may lead to other disputes. Under the Constitution, but for the judgment of the High Court, resort could be had to the Federal Arbitration Court. We believed for a considerable time that railway servants concerned in a dispute extending beyond the limits of a State had the right of appeal to the Federal Court. But the Constitution, as now interpreted by the High Court, prevents that. Therefore, we have this peculiar position - that we have one class of Inter-State disputes that cannot be provided for either by State law, or, in consequence of the judgment, of the High Court, by Federal law. Consequently, we see the urgent need of affording railway employes the opportunity of appealing to the Federal Arbitration Court.


Senator St Ledger - What difficulty has arisen since- that dispute occurred?


Senator PEARCE - If the honorable senator's party had been in power, difficulties would have arisen. I come now to the Bill to amend section 51 of the Constitution by adding to it the following paragraph

Trusts, combinations, and monopolies in relation to the production, manufacture, or supply of goods _ or the supply of services.

Senator Millen,in his speech yesterday, quoted a good number of opinions from the United States of America, and alluded to practices which obtain there.


Senator Millen - As to what?


Senator PEARCE - As to the operation of Federal law in regard to trusts, combinations, and monopolies.


Senator Millen - I never quoted one.


Senator PEARCE - The honorable senator quoted Dr. Woodrow Wilson.


Senator Millen - Not as to trusts and monopolies.


Senator PEARCE - No; as to the operation of the law.


Senator Millen - No; my quotation from Dr. Woodrow Wilson was as to the necessity of preserving State selfgovernment.


Senator PEARCE - In respect of what?


Senator Millen - To secure State rights.


Senator PEARCE - In respect to InterState trade.


Senator Millen - Not with regard to trusts and combines in any way.


Senator PEARCE - The quotation had? particular reference to Dr. Woodrow Wilson's Presidential campaign. The honorable senator alleged that Dr. Woodrow Wilson stood for the retention of State rights in these matters, and that Mr. Roosevelt stood for the extension of the Federal power to deal with trade and commerce.


Senator Millen - No; it had nothing todo with trade and commerce.


Senator PEARCE - In respect of what, then?


Senator Millen - The one simple question was the proposal of Mr. Roosevelt to modify the Constitution in the direction of giving greater power to, as the honorablesenator would say, the people.


Senator PEARCE - (Let us see what Mr. Roosevelt's position in that regard was.


Senator Millen - To tear up the Constitution, practically.


Senator PEARCE - Two articles have been published in the North American Review for November. One entitled, " Why I am for Woodrow Wilson," and the other, " Why I am for Roosevelt." The passage which I wish to quote is this -

The Democratic party and Governor Wilson, its candidate, apparently do not realize that these private powers which have established1 monopolies of meat, iron, sugar, natural oil, transportation, and other necessities, are morepowerful than any State Government, and that by the use of modern machinery, of steam and electricity, of the telephone, the telegraph, they hold the Continent as in the hollow of their hand, that State lines are as nothing to them, and that it will tax the power of the Federal Government to subject them to the proper rontrol. The Progressive party would in no way minimize the power of the States nor lessen itsactivity, but it sees that most private interests seeking to prey upon the public, and .to escape with their public plunder, are joining with the Democratic party in its cry against national control. The Progressive party is pledged to the proposition that the whole power of the nation, must be exerted to stop and hold in check the exploitation of the nation for private aggrandizement, and that the Federal Government should extend its agencies for exercising its constitutional powers.

The writer proceeds -

Governor Wilson says he " will make war upon such a proposition to the utmost of his power." That is the attitude of the Democratic party ; it is opposed to Federal control and regulation, of trusts. No other power can do it.

The article then goes on to say -

The great corporations must be regulated by the said Government or not at all. The choice is between Government regulation and a lawless private plutocracy growing constantly greater by unrestrained privilege. The Progressive policy is to strengthen the Sherman anti-trust law by defining what acts constitute a restraint of trade, and to quickly enforce it through the proposed Commission. Great combinations of capital must exist. To allow them to be formed, and to do business for years without interruption, and then bring suit for dissolution, is illogical and ineffective, as demonstrated by the Standard Oil and Tobacco Trust suit. The Progressive party would subject them to constant Governnent control, take from them every special privilege which has been the principal means of monopoly, and so leave the way open for competition where competition is needed.


Senator Millen - May I hand the honorable senator the actual quotation which I used yesterday?


Senator PEARCE - I do not care.


Senator Millen - No; the honorable senator does not care whether I said what he has represented or not.


Senator PEARCE - If the honorable senator says that his quotation from Dr. Woodrow Wilson had no reference to the law dealing with combines and monopolies, I accept his statement.


Senator Millen - I will hand the honorable senator the actual quotation, and will ask him to read it to the Senate, so that he may be as nearly fair as he can be.


Senator PEARCE - The quotation is as follows: -

We declare that all powers not specifically granted to the Federal Government belong, and of right must be exercised by, the States in their sovereign capacity, and we assert that the most effective results in government are attained by the complete exercise by the States of these reserved sovereign powers. We are unalterably opposed to any usurpation by the Federal Government of the rights of the States.

Very well ; that is a general statement. What I have quoted from the North American Review is a particular statement, showing the line between the Roosevelt party and the Woodrow Wilson party.


Senator Long - There is nothing in Senator Millen's quotations with which the Minister cannot agree.


Senator PEARCE - Nothing. It is a general statement, but the passages which I have quoted are specific, applying the general statement to the regulation of trusts and combines. Anybody who reads the speeches of the respective candidates knows that that was the line of attack and defence. As regards Senator Millen's quotation, I want to say that America is about the last country to which we should go for guidance on the question of dealing with trusts and combines.


Senator Millen - Your people are always going there.


Senator PEARCE - We go there for examples of their operations. To go to American statesmen for guidance as to how to deal with trusts is to go to people who stand confessed as abject failures in that respect throughout the legislative world. If you can believe the statements which they make of each other, they are men who were placed in power by the trusts themselves. If you can believe Roosevelt, Woodrow Wilson, and Taft, then they are the very last people to whom we should go for guidance on this particular subject. America is the last country to which we should go for guidance, because, if there was ever a country that was trustridden, it is America, and I suppose it has the greatest number of anti-trust laws on its statute-book of any country on earth. I propose to come a little nearer home, and to .deal with a Trust whose operations have recently been investigated by a Royal Commission - I refer to the Sugar Trust. I am about to quote from the report of the Commission, which, apparently, took a very friendly view of the Trust, and whose report has, apparently been hailed with very great delight by honorable senators opposite. I shall, first, quote from Part III. of the report, dealing with growers, millers, and refiners. Honorable senators opposite say that the Government cannot regulate prices, but we have clear proof in the report of this Commission that, whether the Government can regulate prices or not, the Colonial Sugar Refining Company can, and does, regulate prices in the most effective fashion. The extracts are as follows -

2.   The equitable distribution of profits among the various sections of the sugar industry primarily depends upon the prices of sugar cane, raw sugar, and refined sugar respectively. Where competition is keen throughout an industry, the prices of commodities produced at the several stages of the industry may be assumed to be proximately fair. Even where competition is not actual, it may be potential, as where a largebusiness concern which is not subject to immediate competition pays a" fair price for its raw material, or charges a fair price for its output, through fear of bringing new competitors into existence. Even where neither actual nor potential competition exercises an appreciable influence upon price determination, fair prices may result from collective bargaining.

3.   It would be futile to contend that the foregoing factors are wholly inoperative in Australia with respect to the prices of sugar cane, raw sugar, and refined sugar respectively. It would be no less futile to contend that their operation is reasonably effective as a means of securing an equitable distribution of the profits in the sugar industry. To discover the extent to which they operate in practice we have to consider in detail the several commodities to which reference is made.

4.   For practical purposes, the price of refined sugar in Australia is fixed by the Colonial Sugar Kenning Company Limited. The absence of actual competition among refiners is evidenced by the fact that the rival refinery at Millaquin automatically follows the lead of the Colonial Sugar Refining Company. Potential competition can have little significance within an area where a dominant company is already in the field and the market is too limited to invite new concerns to enter upon a war of competition. Collective bargaining is inoperative. What actually happens is that the Colonial Sugar Refining Company fixes the price subject to two main qualifications. The price must not be so high as to encourage large importations of refined sugar by other persons or companies. On the other hand the price must be at least high enough to admit of refining profits while paying for raw sugar a price sufficiently high to avoid squeezing producers of the raw material out of existence.

5.   The Colonial Sugar Refining Company, in addition to fixing the price of refined sugar, fixes also the price of raw sugar. The basic price of raw sugar is fixed at £9 7s. 6d. per ton, when the selling price of refined sugar is £19. For every £1 increase in the selling price of refined sugar, the price of raw sugar is enhanced by 18s. In establishing this sliding scale of prices for raw sugar, the Colonial Sugar Refining Company cannot be said to be influenced by any competition, actual or potential. The only rival refinery falls into line with the Colonial Sugar Refining Company for prudential reasons which, from a business point of view, may be regarded as conclusive.' Collective bargaining, as a factor in price determination, may be regarded as non-existent. The millers cannot export their raw sugar in competition with the coloured-grown sugar of Java. Though they might combine to insist upon more liberal terms, the issue of such combination could hardly be doubtful. The Colonial Sugar Refining Company, by virtue of its greater staying powers and other advantages, must in the end get its way.

6.   It follows from what has been said that neither competition nor co-operation has proved an adequate protection to the growers as a class. The really operative check upon the millers in fixing the price of cane is not, generally speaking, competition (actual or potential), but the necessity of keeping the mills supplied. If the miller does not pay the growers a subsistence price the growers can discontinue supplies. This operative check upon the miller might be a reasonably effective check if the growers were in a position to refuse supplies. Unfortunately, speaking of the great body of growers on the Queensland littoral, they are not in a position to employ this weapon effectively. They have invested their all in their farms, and they have no alternative form of cultivation to which they can turn in self-defence.

14.   In our examination into the company's profits we were limited by an injunction issued "by the High Court. As we have already explained in our introduction to this report, under all the circumstances of the case, especially in view of the need for presenting this report as early as possible, your Commissioners decided to obtain such information as they could without recourse to further litigation. As a result of this attitude, our report is not as complete in some important respects as we should wish to have made it.

They go on to deal with the balance-sheets of the company. It is instructive to note that, though this company; through tts monopolistic power, has squeezed down the growers to such a price as will barely enable the growers to continue to exist, it has been able to amass such enormous profits as perhaps have never been made by any other company in Australia -

15.   The balance-sheets of the company, as a matter of fact, indicate, since the inauguration of the Commonwealth, an annual dividend of not less than 10 per cent, on the subscribed capital. In addition, there have been some bonuses. For the year ending 30th September, 1912, the dividends (inclusive of bonuses) amount to 12½ per cent. But in order to ascertain the real dividend we have to take into consideration the fact that at various times profits have been capitalized by the issues of shares (wholly or partially paid for out of profits). £625,000 has been capitalized in this way. Now, a nominal dividend of12½ per cent. on nominally paid-up capital of £3,000,000 is in reality a dividend of approximately 15¾ per cent. on the actually paid-up capital of £2,375,000. In addition, over £80,000 has been added for the same year to the balance of the profit and loss account. Taking into consideration the fact that the balance to profit and loss account, September, 1911, was £123,444, and bearing in mind that the company has a further disclosed reserve labelled replacement and depreciation fund of £500,000, the conclusion would appear to follow that the company might have distributed with perfect safety the £80,000 carried for the year to the balance of profit and loss account. Had this been done the dividend would have exceeded 19 per cent. on the actually subscribed capital.

 

This means that £2,375,000 has yielded investors generous dividends distributed halfyearly, and reserves (inner and distributed) of £3,625,000. We think it fair to conclude from these figures, supplied by a company whose expansions of business have been built on a basis of milling and refining profits, that the milling and refining industries in Australia are conducted as a matter of fact under conditions which admit of high profits.

19.   Unfortunately, when we come to the growers, we find a very different story. While the millers and refiners make handsome profits, the profits of the growers, as a class, are quite inadequate.

That, of course, is the old tale of the trusts the world over. If you were to compare the report of this Commission with the report of the inquiries held by the United States Courts into the operations of the Standard Oil Company, and various other trusts, I do not suppose that you would find a very great variation - huge profits, exorbitant prices to the community, and crushing prices to the producers who supply them with the raw material. Then we come to the question of the public control of prices. Honorable senators opposite are for ever saying that it is impossible to control prices. They remind me of the old lady who, when she first saw a locomotive, said, " It will never go; it can never go"; but, when it commenced to go, she said, " It will never stop ; it will never stop." She was a true Conservative. Whenever any new legislation is proposed, the Opposition cry out with one voice, " It cannot be done; it is impossible," and, when it is put into operation, they say, " Where is this sort of thing going to stop ? " So it is with the proposed regulation of prices. They say, " It cannot be done," although they see it being done all around them. They see the ancient law of supply and demand interfered with time and again in the business world. This Royal Commission inquired into the question, and dealt pretty exhaustively with the control of the prices for raw sugar and sugar-cane. I may be excused for quoting somewhat largely from the report on this question, because I suppose there is no industry into the operations of which there has been as thorough an inquiry by men who, at any rate, are of fairly high intelligence. The report states -

26.   The cost of growing sugar-cane is difficult to estimate. Apart from fluctuations in land values, allowance has to be made for floods, cyclones, scarcity of rainfall, pests, &c. The cost of the manufacture of raw sugar, and of sugar refining, can be calculated with relative certainty. Hence the question arises whether it would not be possible for public authorities to arrange a sliding scale according to which the price to be paid for raw sugar and sugarcane respectively would vary in a fixed proportion to the selling price of refined sugar - due allowance being made for milling and refining costs, inclusive of depreciation and a reasonable percentage on capital outlay. The sliding scale of prices would, of course, be no novelty. The

Colonial Sugar Refining Company, as we have seen, pays £9 7s. 6d. per ton for raw sugar when the selling price of refined sugar is £19. For each £1 increase in the price of refined sugar, the price of raw sugar is enhanced by 18s. Further, the Colonial Sugar Refining Company has, at one time or another, made overtures to the growers for the adoption of a sliding scale of prices with respect to sugar-cane, although the growers, for reasons not difficult to understand, have generally preferred the offer of a straight-out price. Other millers have paid for cane, or have offered to do so, on a sliding scale.

27.   The disadvantages of existing arrangements or offers as to a sliding scale of prices are chiefly two -

(1)   The growers rarely share any part of the bonus paid to millers of 18s. for every £1 increase in the selling value of refined sugar.

(2)   The sliding scale, in so far as it is in operation, is fixed, not by competition, nor by collective bargaining, nor by an impartial body, but by private business concerns which enjoy a more or less monopolistic control.

28.   The difficulties to which allusion has just been made could, as we believe, be overcome by legislation constituting machinery for the purpose of insuring that the prices for raw sugar and cane respectively shall be determined, not as at present by one party to a bargain, but by some authority or authorities empowered by law to act in the interest of all parties. We believe that along these lines is to be found the ideal solution of the problem of insuring an equitable adjustment of the profits of the sugar industry among its various branches. Before proceeding to work out this suggestion in detail, we think it desirable to consider some preliminary objections which have been submitted to us, or have occurred to us, in the course of our investigations.

29.   It has been urged that the proposal is revolutionary. We are not disturbed by this objection. The industrial organization of modern society is rapidly changing, and, more especially in some of its branches, calls for novel legislation. Within the Australian Commonwealth, probably no more striking example could be adduced than the sugar industry. The existing methods of price determination place a virtually despotic control in the hands of the purchasers. The substitution for those methods of a public control of prices is one way out of existing difficulties. In our opinion, the other alternative is nationalization of the refineries. We have already given our reasons for not advocatingnationalization. Moreover, Australia has already pledged itself to the determination, by "public authorities, of the price of labour. One witness expressed the present situation as follows': - " The grower is between the Devil and the deep sea." The grower has to pay a price which is fixed by public authorities for labour, while he receives for cane a price which is fixed by the miller. We see no reason why the principles which underlie our industrial legislation for the protection of the wage-earner should not be extended to protect the grower. Parliament (whether Commonwealth or State), following the analogy of legislation for fixing theprice of labour, might adopt either of three alternatives : - (1) It might fix prices by law directly- the policy of the legislative minimum. (2) It might arrange for representatives of the various branches of the industry to agree to a scale of prices - the policy of Wages Boards. (3) It might intrust the determination of the sliding scale to an impartial tribunal - the policy of compulsory arbitration. As to the choice between these various policies, we shall venture to express an opinion later on.

Then they quote some evidence, and in subparagraph 3 of paragraph 30 they say -

(3)   We are also at a loss to see why, if prices can be fixed as they are at present by one party to a bargain, they cannot be fixed by a public authority acting in the interest of both parties. The prices of raw sugar and sugar-cane in Australia at present are fixed, not by laws of supply and demand (within the Tariff wall), but by refiners in the one case and millers in the other. We have already dwelt on this fact at some length.

31.   Apart from the objections just considered that a public control of prices is revolutionary and impossible, the objection has been urged that no reason exists for singling out the sugar industry for special legislation. But to this, the obvious answer is that the conditions in the sugar industry are exceptional, and call for exceptional legislation. . We know of no other industry in Australia in which the determination of prices is to so large an extent in the hands of one party to the bargain.

32.   It has been urged that, although prices may be fixed under public control, no law could compel the miller or the refiner to buy. It has also been urged that, with regard to the Central Mills, the State of Queensland has a vested interest in the maintenance of the present system until those mills have discharged their indebtedness to the Government. We consider these objections together, because they both have their apparent origin in a misunderstanding with respect to the purposes of any rational scheme for the public control of prices. The objects of such a scheme would not be to prevent any branch of the sugar industry from making reasonable profits, but to secure a reasonable distribution of profits.


Senator Vardon - Do they not propose to do that by means of the Tariff ?


Senator PEARCE - No; they propose to do it by means of direct legislation.


Senator Vardon - Hear, hear !


Senator PEARCE - They propose Federal legislation, and that, of course, means an amendment of the Constitution. Will the honorable senator say " Hear, hear !" to that also?


Senator Vardon - I have not heard what they have to say ; read on, please.


Senator PEARCE - The Commissioners say -

If it were found upon such reasonable distribution that one or more branches of the industry were not securing an adequate return on capital outlay, then the import duty would have to be raised. We believe that when once the scheme was established, it would be recognised by all parties, and by the State of Queensland, as a just solution of existing problems.

33.   One possible objection to public control of prices is that public control, by giving a public guarantee of fair prices, would result in the production of a surplus. There might be, for example, a surplus of Australian-produced sugar ; or there might be a surplus of cane supplied at one or more of the mills, i.e., a greater supply than the mill could crush. As regards the latter surplus, the difficulties could be overcome as at present by mutual arrangement between millers and growers. As regards the surplus of Australian-produced sugar, we do not think it likely 'to occur for some years to come in view of the expanding local market. Should it occur, however, a difficult situation would arise in view of the facts that exportation must involve a loss, that sugar is not a commodity which can be stored for indefinite periods, and that, being one of the necessities of life, no great increase inthe local demand would be stimulated by loweringthe price on the local market. The situation would not, however, be wholly novel: and it might be dealt with as under existing conditions.

If the surplus tended to recur, despite the deduction in price, the fact would indicate that the protection was unnecessarily high ; and the proper remedy would be to lower the import duty. Otherwise there would be introduced into Australia some of the more objectionable features of the Cartel system.

34.   We have spoken, hitherto, of the public control of prices. The expression is designedly ambiguous. It evades the difficult question of the spheres of Commonwealth and State action. It says - nothing of the particular machinery which, whether State or Federal, is to interpret public control in definite executive action. Under other circumstances we might have felt entitled to leave such questions to the consideration of Legislative Assemblies. But, as we have recommended a departure from existing legislative practice in Australia, we feel it to be our duty to consider briefly the means for giving effect to the policy which we have advocated.

35.   At the outset, we venture to express the opinion that the machinery should be Federal. Several reasons, taken cumulatively, enforce this conclusion upon us : -

(1)   The burden of protecting the sugar industry is borne by the consumers of the Commonwealth.

(2)   The purposes which are served by the sugar industry, more especially the settlement and defence oftropical or semi-tropical areas, are national in a special sense, and give to the industry a unique national significance.

(3)   The import duty (the amount of which should be assessed from time to time by authorities in organic relationship with the authorities which control prices) is fixed by the Commonwealth Parliament, and could in the nature of things be fixed by no other body.

(4)   The price of raw sugar could not be fixed by any one State,' since the refineries are established in several States. The absurdity of invoking legislation and accessory machinery in four States when the same object can be achieved by Commonwealth action must be apparent.

(5)   Assuming, and we see no other conclusion possible, that Commonwealth authority should control the price of raw sugar, it follows by inevitable sequence that the same authority should control the price of sugarcane. We do not wish to call in question for a moment the claims of the States to self-government in matters of purely local concern ; but we are quite unable to resist the conclusions that what is imperatively needed in the case of the sugar industry is a single controlling ultimate authority, and that such authority must in the very nature of things derive from the Commonwealth. If sugarcane were produced only in Queensland, the conclusions just suggested would follow with less force than they do. But sugar-cane is already produced in New South Wales on the northern rivers; and, in time to come, it may be produced in the Northern Territory.

36.   We are aware that an amendment of the Constitution may be necessary. But we believe that the passing of such an amendment should not be difficult, in view of the national importance of the sugar industry, the burden imposed Upon the Australian consumers by the continuance of the sugar policy, and the various reasons which we have urged for securing by Commonwealth authority a just distribution of the profits which accrue in the sugar industry as a result of the protective policy.


Senator Vardon - Is there any other primary product which is protected?


Senator PEARCE - Yes; I think there are duties on bacon and butter ; and I fancy that the honorable senator voted for them.


Senator Vardon - The duties are very small. Is there a duty on wheat, or wool, or minerals?


Senator McGregor - There is a duty on wheat.


Senator PEARCE - If there is a duty on those articles it is inoperative. My apology to the Senate for quoting so largely from this report is that practically every statement therein made regarding the sugar industry applies equally to the tobacco industry. The tobacco monopoly in Australia is in precisely the same position, both as regards the consumers of tobacco and as regards the growers of tobacco leaf, as is the sugar monopoly.


Senator St Ledger - Now, you know that that is not correct.


Senator PEARCE - I know that it is an absolute fact. I assert that every word which has been written by the Sugar Commission in relation to the sugar industry applies equally to the tobacco industry, which is not only protected by the Tariff, but has absolute power to fix the price of tobacco leaf in Australia, and also the retail price of tobacco, and exercises it. If the Sugar Commission's arguments are conclusive, honorable senators on the other side, if they say that we should not have Federal control for the purpose of regulating prices, will have to contradict the reasons given in this report. If, on the other hand, they say "It is all very well to fix prices, but you must fix them through the States," they should answer the reasons given by the Sugar Commission why the industry should be controlled by the Federal Government. The Labour party has never said that it believes in fixing prices universally. What we have said is that where an article is the product of a monopoly, it is necessary that the Government should step in to protect the consumer of that article and the grower of the raw material.


Senator St Ledger - You cannot have two standards of wages.


Senator PEARCE - It is in these cases that a necessity to regulate prices exists. I desire to say a few words regarding the proposal to empower the Commonwealth Parliament to enact a general arbitration law. A good deal of an extreme character, perhaps on both sides, is said about Arbitration Courts. I am one of those who have never thought that an arbitration law was anything else but an expedient.


Senator Vardon - A very bad expedient, too.


Senator PEARCE - It was an expedient to get over a very awkward difficulty, and that is the difficulty of settling industrial disputes. So far, in my judgment, it is the best expedient which has yet been discovered to deal with the settlement of industrial disputes.


Senator Vardon - Oh, no.


Senator PEARCE - I know of no better expedient.


Senator Vardon - Canada has a better system.


Senator PEARCE - Practically, the Canadian system is to let the parties fight the dispute out. We know that so far as the Federal Arbitration Court is concerned it is hampered at every turn, and although it is extremely cribbed, cabined, and confined, I venture to say that it has a very fine record to its credit.


Senator Vardon - I do not think so.


Senator PEARCE - We shall see.


Senator St Ledger - Many of the unions do not think it has.


Senator PEARCE - I propose to put its record before the Senate by quoting from a parliamentary paper which was ordered to be printed on the 29th August last. It is a return showing -

 


Senator Vardon - Out of a total of how many workers?


Senator St Ledger - Over 1,000,000.


Senator PEARCE - That is where the Court suffers. It is so cribbed, cabined, and confined that practically every worker who can go under the Court is under it today. I venture to say that this list exhausts the number of those who can come under the Court.


Senator St Ledger - If every worker can come under the Court, why do you want the law amended?


Senator PEARCE - Senator Vardonsaid that there are 1,000.000 workers who are not under the Court and I reply that these 103,000 persons were practically all who can come under it.


Senator Vardon - And a goodjob, too.


Senator PEARCE - Would the honorable senator say that it would be better to have a system under which we should have strikes and locks-out?


Senator Vardon - No.


Senator PEARCE - Than a system under which we have that number of men working peaceably under awards?


Senator Vardon - You could get a much better system.


Senator PEARCE - I venture to say that there is no State industrial tribunal which has worked so smoothly, and whose awards and agreements have been so little disturbed, and so faithfully obeyed, as have the awards of the Federal Court.


Senator Vardon - What has it cost, and what would it cost to disturb them?


Senator PEARCE - Cost is a comparative term., and I may answer by saying that the cost of obtaining the awards and agreements would be a mere drop in the bucket compared to the cost weekly to the people of Australia of a strike in the maritime industry. We have those engaged in the maritime industry working peacefully now under the award of the Commonwealth Conciliation and Arbitration Court.


Senator St Ledger - The honorable senator has forgotten the Brisbane strike.


Senator PEARCE - I have not forgotten it, and no better instance could be given of the necessity for giving workers within a State the right to appeal to a Federal Court for an award.


Senator Fraser - The cost of living in Queensland is about half the cost of living in Western Australia. How is it possible to fix the same rates for both States ?


Senator PEARCE - Does the honorable senator not know that many of the 100,000 workers referred to in the statement I have quoted are employed in the shearing industry at varying rates of wages? In South Australia alone there are two, if not three, different rates of wages paid in the industry; in New South Wales another rate ; and in Victoria there are varying rates for different districts of the State. In my opinion, industries, like commerce, are Federal in their character. Even where there is no intimate connexion between State and State, the operation of a particular industry in one State affects the operation of industries of the same kind in other States.


Senator St Ledger - That is an argument for Unification.


Senator PEARCE - Industrially, it. is. I say that Australia is already unifiedindustrially, except so far as the power to regulate the wages and conditions of labour are concerned. We unified Australia industrially when we took from the States the power to erect Tariff walls around their boundaries. Whilst we unified Australia in that sense, we kept it divided into six different parts for the purpose of the regulation of industrial conditions in the various industries of the several States.


Senator St Ledger - Where is the unifying going to stop?


Senator PEARCE - I have shown that it started with the adoption of a uniform Customs Tariff. The Tariff creates one industrial arena for Australia, and as a logical outcome of a uniform Tariff there should be a uniform industrial law. The one is the necessary concomitant of the other.


Senator St Ledger - The States could make their laws uniform.


Senator PEARCE - They could do so, but they have not done so. They have varying industrial laws, and in some States scarcely any regulation of industry at all. Among those who have recognised this are the State Governments themselves, and honorable senators now occupying the Opposition benches. I intend to show how they have recognised it. At page 9 of the report of the proceedings of the Premiers' Conference, 1912, I find this -

Resolved - That it is expedient that a Bill embodying provisions to the following effect be adopted by the State Parliaments -

Then follow provisions to enable disputes coming within the constitutional section to be referred through a certain channel from State tribunals to the Commonwealth Court of Conciliation and Arbitration. The State Premiers proposed to make provision to achieve in a roundabout way what we propose to achieve in a direct way. That is a recognition by the State Premiers that State legislation is ineffective, and produces unequal and unfair conditions in industry, and methods were suggested by them to invest the Commonwealth tribunal with power to overcome that difficulty. That is a confession of the unsatisfactory nature of the present distribution of industrial powers. All the Opposition can now say is that they do not deny the need of some tribunal to equalize industrial conditions, but they object to the methods by which we propose to bring it about. I can not only refer to the resolutions of the State Premiers, but I have here a copy of the InterState Commission Bill introduced into this Chamber by Senator Best as a member of the Fusion Government. Part V. of that Bill dealt with industrial matters, and proposed to do almost what the State Premiers suggested. It proposed the establishment of a Federal Court of Industrial Appeal, to which appeals might be made from State industrial tribunals, in order to equalize competition in different industries. In these two proposals we have a recognition from those who now oppose the alteration of the Constitution pf the need for the possession by this Parliament of these powers, the only difference of opinion being as to how the powers should be exercised. We can resort in - this matter also to Mr. Glynn's memorandum as giving, I presume, the views of the Fusion Cabinet then in power. I do not know whether honorable senators opposite will repudiate Mr. Glynn's memorandum, but, dealing with suggested constitutional amendments, he says, at page 8 -

Power for the Federal Parliament to make laws : -

For enabling the Inter-State Commission toregulate industrial matters in any State, so far as is necessary in the judgment of the InterState Commission, for the purpose of removing such obstacles to the establishment in any State of fair industrial conditions as arise from unfair competition, or the prospect of unfair competition, from other States.

In exercising powers under any such law, the Commission shall take into account the difference of economic conditions in different parts of the Commonwealth, and shall have due regard to the interests of producers, workers, and consumers, and of the public generally.

In addition to that, we have the famous memorandum on new Protection by Mr. Deakin. That was issued before the formation of the Fusion party, and, I presume, will be repudiated by members of the party now. But it is interesting in the light of recent history to read what Mr. Deakin said on this question -

These proposals, to some extent, cover theground that is already occupied by legislation in some of the States. Every exercise of power by the Commonwealth in matters in which Commonwealth and States have concurrent authority must be subject to this condition. The cooperation of the States Governments is most desirable in every aspect; but the Commonwealth cannot ignore its obligations, so far as the Constitution allows, to secure equitable and uniform industrial conditions in all the industries which come within the range of its fiscal legislation.

The proposals for requiring the maintenance of fair and reasonable conditions in protected industries are simply a corollary to the power of imposing protective duties. To restrict the powers of the Commonwealth to the mere imposition of these duties while the conditions under which the manufacture of protected articles are carried on differ so widely in the different States would be to permit inequality, discrimination, and discord. The ideal of the Constitution is equality and uniformity in all national matters. With that end it prohibits the imposition of taxation in such a way as to discriminate between States or parts of States. The ideal can hardly be realized if uniformity of protection is coupled with wide diversity in the conditions of manufacture. Effective and useful as State industrial laws have in many cases proved, their operation is circumscribed by State boundaries, and it can hardly be claimed for them that they either door can secure uniformity in the conditions of manufacture throughout Australia. No authority but the Commonwealth Parliament can do this, and the attempt to do it in the way that has been outlined, is in fullest harmony with the Federal aims and character of the Constitution.

This is the gentleman who now says that these proposals mean Unification. He then said -

The way that has been outlined is in fullest harmony with the Federal aims and character of the Constitution.

The way outlined by Mr. Deakin in his new Protection memorandum was not through the Inter-State Commission, but by direct operation of the Federal power itself. Yet, in a few short months, this same gentleman will be taking the stump and asking .the people to reject these proposals on the ground that they lead to Unification. > I wish now to refer to the proposed alteration of the Constitution for the purpose of dealing with corporations. In my opinion, the necessity for a uniform company Taw has long been- recognised, and it is only party bias and prejudice which prevents members of the Opposition from saying so. There are no gentlemen better acquainted with company law than some of those who sit on the Opposition benches, and no one knows better how difficult it is to conduct business under six separate company laws operating in the different States. Before the amendment of the Constitution came to be viewed as a party question, business men in Australia from time to time urged the necessity for a uniform company law. What is our present position in this regard ? Up to the time of the Huddart Parker case under the Australian Industries Preservation Act, members of this Parliament, not merely those occupying the Government benches, but those occupying the Opposition benches as well, believed that we had far more power than the High Court has decided that we have. Any one who reads the judgment in the Huddart Parker case must come to the conclusion that we have no power other than the power to register, and when we find four Judges expressing four different opinions, we can be excused if we also come to the conclusion that even the Judges of the High Court themselves are not sure as to what powers we have. As the Huddart Parker case was one in which our power with regard to corporations was defined, it is important that we should get a grasp of what the judgment meant, and its effect to-day upon our Constitution. I say that its effect has been to alter the meaning of words, and to read into words contained in the Constitution a meaning which they do not commonly bear. I refer honorable senators to the report of the case -

Sections 4 and 7 of the Australian Industries Preservation Act constituted certain acts offences when performed by any person in relation to trade and commerce with other countries or among the States.

Sections 5 and 8 of the same Act constituted

Proceedings were instituted against a corporation under sections 5 and 8, and the corporation challenged the validity of these sections on the ground that they were not in substance legislation regarding corporations, but regarding trade and commerce, and should therefore have been limited to Inter-State or foreign trade and commerce.

The Court, by a majority (Isaacs, J., dissenting), upheld the contention of the company, and decided that the two sections in question were invalid.

Here is an extract from the head-note of the case Huddart Parker and Company Proprietary Limited v. Moor head, reported in 8 Commonwealth Law Reports, page 330-

By the whole Court. Section 51 (xx.) of the Constitution does not confer on the Commonwealth Parliament power to create corporations, but the power is limited to legislation as to foreign corporations and trading and financial corporations created by State law.

By the Court (Isaacs, J., dissenting). - Sections 5 and 8 of the Australian Industries Preservation Act 1906 are ultra vires the Commonwealth Parliament and invalid.

By Griffith, C.J., and Barton, J. - Section 51 (xx.) of the Constitution confers upon the Commonwealth Parliament power to prohibit foreign corporations and trading and financial corporations formed under State laws from engaging in trade and commerce within a State, as distinguished from trade and commerce between States or with foreign countries, or to impose conditions subject to which they may engage in such trade and commerce, but does not confer upon the Commonwealth Parliament power to control the operations of such corporations which lawfully engage in such trade and commerce.

By O'Connor, J. - The power conferred by section 51 (xx.) of the Constitution is limited to the making of laws with respect to the recognition of corporations as legal entities within the Commonwealth, and does not include a power to make laws for regulating and controlling the business of corporations when once they have been so recognised and are exercising their corporate functions by carrying on business in the Commonwealth.

By Isaacs, J. - Section £r (xx.) confers on the Commonwealth Parliament power to control the conduct of the specified corporations in relation to outside persons, but not the powers and capacities of corporations, and sections 5 and 8 of the Australian Industries Preservation Act 1906 are a -valid exercise of such power.

By Higgins, J. - The power conferred by section 51 (xx.) of the Constitution on the Commonwealth Parliament is a power to legislate with respect to the classes of corporations named, -as corporations - that is, to regulate the status and capacity of such corporations and the conditions on which they may be permitted to carry on business; but does not include a power to regulate the contracts into which corporations may enter within the scope of their permitted powers. Sections 5 and 8 of the Australian Industries Preservation Act r()06 are not legislation with respect to such corporations, but legislation with respect to trade and commerce.

The sum and substance of that is that practically our powers with respect to trading corporations are those of registration only and that the carrying on of trade and business is completely within the functions of the States. The words of the Constitution, therefore, with respect to the control of corporations, are absolutely blank and meaningless. That judgment attracted the attention of legal luminaries all over the world, and has been discussed in the legal journals by very high authorities. I pl C*pose to quote one criticism of it, published in the Journal of the Society of Comparative Legislation for July,1 1911. The article is contributed by Mr. A. Berriedale Keith, D.C.L. After quoting the substance of the judgment which is practically what I have read, the writer goes on to say -

Nor in the case of the Australian Industries Preservation Act r()o6, does the judgment of the majority of the Court seem very convincing. The power of the Commonwealth to legislate with regard to foreign corporations and trading and financial companies formed under State laws is no doubt not an unlimited one, but the particular exercise of the power to which exception was taken, the prohibition of such companies or corporations forming monopolies or conspiracies in trading matters, seems an exercise of power which it is peculiarly probable that the Commonwealth Parliament was meant to have. It is notorious that in Australia certain great foreign corporations are believed to have, or to desire to secure, a hold such as to defeat other competition, and only a Federal law, it is clear from the experience of the United States, could successfully deal with such corporations. If the matter were left to State activities, probably the whole end of prohibition would be defeated by the action of one State, just as Tasmania supports Tattersalls after its exclusion from the rest of the Commonwealth. No doubt the interpretation of the full ambit of the power of the Commonwealth regarding such corporations would be difficult, but it is hard to think that it was in any way ultra vires to forbid corporations to monopolize trade. Moreover, if this power is not vested in tV Commonwealth, it is clearly one which must, in the public interest, be so vested.

That is the judgment of a lawyer, who, 1 take it, must be an authority, or his opinions would not find a place in a journal of such repute. He is. far removed from our party conflicts. He looks at the matter entirely from a lawyer's point of view, and that is his ccol, calm, collected judgment on the case, regarding it as one who is not in any way mixed up in our local politics. His judgment, in my opinion, is worthy of all consideration by the people of this country. Mr. Glynn also dealt with this point in paragraph 3 of his memorandum of 1910. He said -

It may, therefore, be well to consider the desirability of" obtaining, by reference to the State Parliaments under section 51 (XXXVII.), or preferably by an amendment of the Constitution, greater or full power to control the con-, tracts and acts of persons (including corporations) within the purpose of the Australian Industries Preservation Act 1906-7.

The method of amendment (section 128) which enables the people to speak both through their national representatives and directly at the poll on a referendum, is evidently more in keeping with the spirit of the Constitution than that of parliamentary reference (section 51, (XXXVII.) which applies to matters affecting the interests rather of two or more States than of the whole Commonwealth.

Mr. Glynngoes on to argue the point again in the following terms : -

It will be seen from these references that i» the United States of America, where combinations and monopolies are more numerous and extensive in their operations, the ineffectiveness of divided power is felt, and greater Federal control is advocated by men who have no desire to unnecessarily narrow the sphere of the States. That the power of Congress is as great in respect of Inter-State, as it is admitted to be in respect of external, trade, has been questioned ; but there can be no reasonable doubt that the power of the Commonwealth Parliament under section 51 (i.) of the Constitution extends to the prevention of any interferences with the absolute freedom of trade and commerce between the States provided for by section 92.

The point is not the plenary character of the Federal power within its acknowledge sphere, but whether, in the interests of the public, that power should extend to legislation in respect of contracts or operations in restraint of trade, whether Inter-State and external or Intra-State, of corporations, or corporations and persons.

Among the considerations that affect opinion in the matter are the difficulties of divided, and the advantages of Federal, control, and the magnitude of the evils to be dealt with. As to these, a few remarks may be made.

No State Acts in the matter exist, or,, if passed, could effectively meet the necessities of the case. It is clear that all Acts, Commonwealth and State, while covering operations of persons or companies in different fields of jurisdiction, should be similar in purport or terms. Otherwise, the lawfulness of operations would depend on locality, and similar facts might be made the basis of different charges, under the State and the Commonwealth Acts respectively. This would mean the application, to the same Acts, of conflicting views or standards of policy or morals, different rules as to proof, on the same evidence conviction under one jurisdiction and acquittal under another,, and, in States without any legislation in the matter, freedom for the operations of the offending persons or companies except so far as controlled by common law.

As regards administration, the difficulties in securing uniformity, so desirable in the case of States presenting similar conditions, would be great. It is clear that, to the extent to which concert in the enforcement of the Acts of the States and the Commonwealth was not attained, the attempts to prevent or suppress the evils would "be ineffective.

Mr. Glynnstronglypresses the view that it is desirable to take these powers, and that preferably they should be obtained directly by an amendment of the Constitution. Mr. Glynn drew up that memorandum when he was Attorney-General in the Fusion Government. I am, therefore, justified in making the statement that that was his own well-considered opinion, committed to paper as the result of his experience as AttorneyGeneral of the Commonwealth, after he had had the duty thrust upon him of investigating the cases that had arisen under Australian law, and after the delivery of the judgment in the case that I have quoted. Therefore, I do say that the charge can be levelled at honorable senators opposite that they are not prepared to deal with these questions on their merits, but that their opposition arises purely from party prejudice, and because there happens to be a Labour Government in office. I have a few words to add, in conclusion, upon the Bill to enable the Constitution to be altered with respect to the nationalization of trusts and combines. In that regard, I wish to say that my position has always been clear. I am one of those who believe that it is in the interests of the people themselves that the great trusts organized throughout the world should not be broken up, and that industry should not be set back into a state of unrestricted competition. I believe that these trusts are doing great work in the economic field, for the benefit of humanity, in that they are organizing industry as, perhaps, it could not otherwise have been organized. I believe also that they are, unconsciously to themselves, taking a definite step in the direction of the public ownership of industry, which will be facilitated by the very work they are doing in organizing their industries under collective control. We have to recognise that one of the pleas that has always been urged for State ownership is that it would make for the elimination of competition, and the waste that results from it. These trusts have proved that you can exercise a control over great industries which is not a personal control, in the sense that those who direct it are not themselves personally interested in the profits. Who are to-day controlling the great industrial enterprises of Australia ? Are the men who are managing the sugar industry and directing its movements the actual owners of that industry ? What do the directors of the Tobacco Company know about tobacco manufacturing? I doubt whether any of them could explain the process by which a cigar is made, or a plug of tobacco manufactured. So it is with other gigantic industries. They are being organized and run to-day by men who, in many cases, have no personal interest in them, who are paid salaries, whose ability and knowledge is bought by the directors. These industries are themselves governed by directors, who themselves have no technical knowledge of the businesses they are directing.


Senator Fraser - The businesses are under their control, and many of the managers get a commission on the success of the industries they manage.


Senator PEARCE - Of course, the industries are under their control. ' But what does that imply? It supplies a complete answer to the statement that used to be made a few years ago that the State could never run these great industries successfully, because, as was alleged, it would not have a personal interest in them such as always arises in the case of a man who is running his own industry. The day when the man who owned an industry ran it for himself has gone for ever. One has only to keep his eyes open and to look around to see that industry is going through a process of evolution. Industry is conducted on lines and under conditions that were absolutely unknown, and could not have been dreamt of, in the time when Adam Smith and other writers on political economy wrote their treatises. Conditions have entirely changed. Yet there are people who would attempt today to regulate commerce and industry on lines laid down by the political economists of old. In my opinion, the conditions of today demand new methods of legislation, and it is because of that that I believe that we should not attempt to break up and disperse these gigantic corporations. I believe that their organization is for the benefit of humanity. The evil arising from them lies here - that whilst you have under collective ownership a means to organize and produce on an economic scale, that very power gives to those who control those industries a means of exploiting the community, and, by exerting an influence on the business life, and even on the political life, of the community, to become dangerous to others. It is dangerous to place in the hands of any group of individuals such an enormous power. Therefore, whilst we want, on the one hand, to conserve the benefits which may be derived from the gigantic corporations, trusts, and combines, we want also to avoid the evils that arise from the exploitation by a few invididuals of the community as a whole. We say that .we can achieve that only by nationalization.


Senator Fraser - We cannot have good management, then.


Senator PEARCE - Will the honorable senator say that we have not good management on our railways to-day? I venture to say, as I said when Senator Millen quoted my statement on the Australian Industries Preservation Act, that one reason why the trusts in Australia have not been so successful as they have in America - one of the reasons why they have not been able to ex1ploit the people to the same extent - is that they have not been able to get hold of those great arteries of commerce, the railways. The very fact that those railways are the property of the States saves the people of Australia from exploitation by trusts and Combines, as has been the case in America. I do not propose to detain the Senate any longer. In my opinion, the proposals now put before the people are reasonable. They are necessary. If they are explained to the people in such a way that their meaning can be grasped, I have every confidence that they will shortly be embodied in the Constitution of Australia.







Suggest corrections