ABSTRACT: This article finds that the existence of a system of federal government issued paper money in Australia owes more to political rather than constitutional design. Support for this perspective can be found in the text of the Australian Constitution and the monetary history of colonial Australia. The political motivations that drove the establishment of the fiat paper money system in Australia can also be understood through an examination of the historical roots of paper money within the context of the English constitutional tradition and by drawing on the American experience. In the US the prevailing view is that a faithful interpretation of the Constitution in line with the intentions of its framers (be they the drafters, ratifiers in State congresses or public opinion at the time) would require that fiat paper money be deemed unconstitutional. Despite this acknowledgement of the intended original scope of the US Constitution, economic considerations and a pragmatic resignation to the financial State–capitalist status quo means that the paper money question is largely ignored rather than engaged. At a bare minimum, the US position recognises the incongruence between the original intent embodied in the Constitution and prevailing conditions. In Australia, however, not only has the issue of the constitutionality of the paper money system never been openly discussed amongst scholars and the legal establishment, but the High Court seems to be actively avoiding the question.
AUTHOR: Andrew Dahdal is a lecturer in commercial law at the Faculty of Business and Economics, Macquarie University. Andrew is interested in the connection between libertarian thought and commercial regulation. He recently completed his PhD at the University of New South Wales using the insights of Austrian economics to critique the interpretation of the Banking Power in the Australian Constitution.
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