U.S. 466.) In the United States, however, as in England, the railways are constructed and owned by companies or individuals. In Australia they are, with few exceptions, constructed and owned by the States; and a doubt arose in the Convention, whether the commerce clause by itself would be construed to extend the authority of the Commonwealth to the Government railways of the States. This express provision removes all doubts on that head.

That "railways the property of any State" are the only railways here mentioned is due to the fact that those are the only railways as to which there could be any doubt, and as to which it was therefore necessary to make an express declaration. That the authority of the Commonwealth extends to private railways-so far as they are engaged in inter-state or foreign commerce-is taken for granted.

Under the federal power to acquire and construct railways, it is probable that railways owned by the Commonwealth will come into existence. That such railways will be subject to control by the Federal Parliament is obvious; but the Commonwealth in working such railways will itself be subject to the stringent provisions of sec. 99, forbidding the Commonwealth to give preference to any State over any other State. Notes to that section.)

See

The extent of the federal power over State railways is limited by other provisions of the Constitution. Thus the power given to the Commonwealth by sec. 51- xxxiii., xxxiv., to acquire the railways of any State with the consent of the State, and to construct railways in a State with the consent of the State, would seem by implication to exclude the exercise of any such power without the consent of the State. Apart from these provisions, it is by no means clear that such a power would not have existed. Thus in the United States it is contended by writers of repute--and the contention rests upon principles settled by judicial authority-that Congress under the wide scope of the commerce clause has power both to acquire and to construct railways, and to create a great national corporation with a monopoly of the railroad business. (See Lewis, National Consolidation of the Railways of the U S., pp. 282-304.) That writer maintains that the cases of McCulloch v. Maryland, 4 Wheat. 316, and Osborn v. U.S. Bank, 9 Wheat. 738, establish the principle that " Congress has authority to create a great national corporation to carry out any powers given by the Constitution to the Federal Government."

A further limitation of the federal power over State railways is contained in secs. 101 and 103, by which the powers of the Parliament as to preferences and discriminations are defined. (See Notes to those sections.)

Commonwealth not to give preference.

99. The Commonwealth shall not, by any law or regulation of trade, commerce, or revenues, give preference" to one State or any part thereof over another State or any part thereof.

UNITED STATES.-No preference shall be given, by any regulation of commerce, or revenue, to the ports of one State over those of another.--Const. Art. 1, sec. 9, sub-sec. 5.

HISTORICAL NOTE.-The Clause in the Bill of 1891 provided that "Preference shall not be given by any law or regulation of commerce, or revenue, to the ports of one part of the Commonwealth over those of another part of the Commonwealth." A second paragraph (also from the United States Constitution) that vessels bound to or from one port of the Commonwealth need not enter, clear, or pay duty in another port, was struck out in Committee. (Conv. Deb., Syd., 1891, pp. 833-5.)

Adelaide Session, 1897.- At Adelaide, the preference clause was adopted almost in the words of 1891, but having appended to it a provision (which had previously formed

(See Prentice

Taxation of commerce is regulation of commerce-and indeed such taxation is often imposed with a view to regulation rather than with a view to revenue. and Egan, p. 198.)

TRADE, COMMERCE, OR REVENUE.-This section is a limitation upon two powers of the Commonwealth the trade and commerce power, conferred by sec. 51-i., and the revenue power, contained chiefly in sec. 51-ii., but also incident to many other legislative powers of the Commonwealth. "Law or regulation of revenue " includes laws which deal with the raising of revenue from any source whatever-whether by taxation, by fines or pecuniary penalties, or by fees for licenses, fee for services, &c. The fact that, under sec. 54, bills appropriating such penalties or fees are not to be taken, for the purposes of that section, to "appropriate revenue or moneys," does not mean that penalties and fees are not revenue-and indeed rather implies the contrary.

As regards taxation, the prohibition against preferences adds little, if anything, to the provision in sec. 51-i., that taxation laws must not "discriminate between States or parts of States." But the use of the wider word "revenue" extends the prohibition to all revenues other than those arising out of taxation, and prevents any preference being given by the Commonwealth in respect of any revenue charges whatsoever; such as fees for postal, telegraphic, and telephonic services, or rates on railways of the Commonwealth.

This section, therefore, extends to all laws and regulations of trade, commerce, and revenue, the condition which is elsewhere imposed with regard to laws dealing with taxation-viz., that they shall not discriminate between States or parts of States. It is a limitation upon the power of Parliament to regulate trade, commerce, and revenue, and is intended to prevent discriminations in favour of one State against others. (Passenger Cases, 7 How. 283.)

$414. "Give Preference."

The object of this prohibition is to prevent federal favoritism and partiality In commercial and other kindred regulations. As any law which gives a preference in contravention of this section will be unconstitutional, and therefore void, it becomes highly important to examine the meaning of the word.

A preference is a discrimination considered in relation to the person or State in whose favour such discrimination is. (See Note on "Preference or discrimination," § 430, infra.) The prohibition here is absolute and without qualification. In the case of preferences by the States there is merely a power given to the Parliament to forbid such preferences as are undue and unreasonable, or unjust to any State; in the case of the Commonwealth, every preference whatever is forbidden by the Constitution itself, irrespective of injustice or unreasonableness.

A preference involves a departure from the standard of equality; but it is not always easy to determine what that standard is. Where, in any two cases that may be compared, there is exact similarity of all material circumstances, any departure from equality of treatment is easily detected. But exact similarity of circumstances seldom occurs; and in comparing dissimilar circumstances it must often be difficult to determine what constitutes inequality of treatment, i.e., a preference. Where the circumstances are dissimilar, a preference may arise either because the dissimilarity of treatment is excessive, or because the similarity of treatment is excessive. With regard to taxation, perhaps no serious difficulty is likely to arise; but with regard to charges for services, equal charges for different services may cause as great inequality as unequal charges for similar services. For instance if on a railway line there are three points, A, B, C, in that order, a rate for the long haul A C may be preferential by being lower than, or equal to, the rate for the short haul A B; or the rate for the short haul A B may be preferential by falling disproportionately short of the rate for the long haul A C. The Constitution prescribes no definite test of equality under dissimilar circumCost of service will presumably be a main element; but if it were the only

stances.

element, it would lead to the illegality of "group rates" on railways of the Commonwealth-i.e., equal rates from one point to all points within a "group" or "zone." It would also be inapplicable to postage rates, where equality of charges-even where the cost of service varies largely-is almost essential, and where any attempt to proportion the charge to the cost of service is both impracticable and undesirable. It is submitted that in deciding what is and what is not a preference the following principles should be applied :

(1.) The section should be construed in a broad and liberal manner, with especial reference to the evil which it is intended to prevent, viz., arbitrary discriminations between States or localities. The rule that no law of the Parliament will be held invalid unless it appears clearly to infringe the Constitution requires that only a plain and substantial preference should justify judicial interference.

(2.) In determining what constitutes equality of treatment, recognition should be given to the practical necessities of the case, and to all the sound administrative or business principles involved. The cost of service should be a main element, but should not exclude other considerations; such as the expediency of a zone system on railways, or the expediency of a uniform charge for postal and telegraphic services.

It seems, in short, that though the section contains no such words as "undue or unreasonable," but prohibits preferences in general, yet in order to arrive at a decision as to what is a preference, the question of what is due and reasonable is to a certain extent involved. If a difference of treatment is arbitrary, or if its purpose is to advantage or prejudice a locality, it is undue and unreasonable, and is accordingly a preference. If on the other hand the difference of treatment is the reasonable result of the dissimilarity of circumstances - or if it is based on recognized and reasonable principles of administration it is no preference. The intention and the effect must both be looked to in order to decide whether a preference exists; and in neither inquiry can reasonableness be ignored.

This does not mean that the words “undue or unreasonable” are to be read into the section. On the contrary, their absence would seem to materially increase its stringency. Reasonableness must be taken into consideration in ascertaining whether a preference exists; but a preference, though ascertained by that test to exist, need not necessarily be an unreasonable preference.

Preferences within the meaning of this section are not confined to fiscal regulations. "We can easily conceive that, if the spirit of sectionalism ever should take possession of Congress, the dominant section might devise many little petty annoyances for boats entering the harbours of the other section which would amount to an unjust preference of the ports of the former. The mere improvement of a particular harbour, the clearing of the navigation of a river which involves the altering of its channel (South Carolina v. Georgia, 93 U.S. 4), the erection of a bridge which obstructs navigation (Pennsylvania . Wheeling Bridge Co., 18 How. 421)-all these, while they may incidentally benefit one port more than another, are not preferences within the meaning of the prohibition. The people, in adopting the Constitution, intended to stop forever one State requiring exactions from the people of another for its own peculiar benefit; but they never intended to prevent the federal Government for the good of all the States from undertaking public works in a particular locality." (Lewis, Federal Power over Commerce, pp. 20-21.)

"to the ports of

$415. "To one State or any Part thereof." The corresponding words of the United States Constitution are one State over those of another." At the time when that Constitution was framed, navigation was the only means of carriage on a large scale, and the prohibition against preferences to ports seemed, to the Convention of 1787, to cover the whole field of necessary commercial regulation. Prentice and Egan (Commerce Clause, p. 306) suggest that--

"It is probable that the construction which will be given to the clause will be in accordance with this broad purpose. Freedom of transportation from conflicting,

discriminating, and burdensome restrictions was the purpose of the Constitution; and while the language employed was almost necessarily such as referred to the means of transportation then in existence and within the knowledge of the Convention, nevertheless the operation of the Constitution is not confined to the instrumentalities of commerce then known, but keeps pace with the progress of the country, and is adapted to new developments of time and circumstance. Within a hundred years the means of transportation has so changed that the commerce among the States conducted by land is more important than that conducted by water. Provisions of the Constitution which at first were applied only to navigation may therefore now be applied to railways, as in the case of the clause which forbids the States from laying any duty of tonnage; and the same view may also be taken of the preference clause.”

In this section the scope thus contended for has been definitely expressed; and the words cover all commerce, whether by land or sea.

The preferences prohibited are preferences to localities. The other two kinds of preferences-preferences to particular persons, or to particular classes of traffic (see Note, § 430, infra) are not mentioned. Of course, however, a preference to a locality consists of a preference to persons or goods in that locality; and accordingly it would seem that a preference to particular persons or classes of traffic - even though no locality were expressly mentioned– might, if it specially favoured any State or part of a State against another State or part of a State, be within the section.

It is to be noticed also that a preference, to come within this section, must not only be a preference to one locality over another, but must be a preference to a locality in one State over a locality in another State. Discriminations between parts of the same State are not provided against by this section. The purpose is to safeguard the interests of the States as against one another, by prohibiting inter-state preferences. The section is "evidence of the intention of the framers of the Constitution to protect the freedom of commerce from the selfish interference of a State, through its influence in the National Government." (Lewis, Federal Power over Commerce, p. 20.)

Nor abridge right to use water.

100. The Commonwealth shall not16, by any law or regulation of trade or commerce117, abridge the right of a State or of the residents therein 418 to the reasonable use419 of the waters of rivers 420 for conservation or irrigation421.

HISTORICAL NOTE.--The only mention of rivers in the Bill of 1891 was in the clause enumerating the legislative powers of the Federal Parliament, which contained a subclause "River navigation with respect to the common purposes of two or more States or parts of the Commonwealth." (Conv. Deb., Syd., 1891, pp. 689-92; see p. 138, supra.)

Adelaide Session, 1897.- The sub-clause as proposed by the Constitutional Committee, and embodied in the first draft at Adelaide, empowered the Federal Parliament to legislate as to The control and regulation of navigable streams and their tributaries within the Commonwealth and the use of the waters thereof." The debate is summarized at pp. 174-6, supra. The clause was ultimately cut down to " The control and regulation of the navigation of the River Murray, and the use of the waters thereof, from where it first forms the boundary between Victoria and New South Wales to the sea." (Conv. Deb., Adel., pp. 794-829.)

Melbourne Session, 1898.-Both Houses of the South Australian Parliament had proposed to extend the clause-the Assembly to all the tributaries of the Murray, and the Council to the rivers Darling, Murrumbidgee, and Lachlan. The result of the first debate (see pp. 194-6, supra) was that after a number of amendments had been proposed and rejected, the sub-clause was struck out altogether (Debates, p. 480), and all proposals