ON 11 AUGUST 1948, the High Court of Australia delivered Bank of NSW v Commonwealth (“Bank Nationalisation case”)  HCA 7; (1948) 76 CLR 1 (11 August 1948).
The High Court held that the nationalisation of banks was beyond the Commonwealth’s constitutional power.
The Banking Act 1947 (Cth) provided that the Commonwealth Bank could acquire shares in private banks, whether by agreement or compulsion. The effect of the legislation would be to grant an monopoly to the Commonwealth Bank, owned by the Commonwealth.
The Banking Act 1947 was held to be invalid on a number of grounds including (1) that it infringed the s92 constitutional guarantee of freedom of interstate trade, commerce and intercourse by compelling the States and their agencies to bank with the Commonwealth Bank and (2) the proposed acquisition was not on just terms as required under s51(xxxi).
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