The Great Depression, this Depression, and Administrative Law
| Published date | 01 June 2009 |
| Date | 01 June 2009 |
| DOI | 10.22145/flr.37.2.1 |
| Subject Matter | Article |
THE GREAT DEPRESSION, THIS DEPRESSION, AND
ADMINISTRATIVE LAW
Mark Aronson
∗
A INTRODUCTION
Instruction on the Great Depression used to come from our parents, our grandparents,
and the History Channel. Now everyone has something to say about it.1 Economists
tell us that the global financial crisis is the biggest economic reversal since the Great
Depression, and governments in Washington, London and Canberra are likening their
resolve to that displayed by President Roosevelt in the early days of the New Deal. If
they were even half-way right, then these would be busy times indeed for
administrative lawyers. Although they are wrong, the legislative and administrative
responses to the current crisis include measures that should rekindle some of
administrative law's deepest concerns about the democratic legitimacy of the
administrative state. New banking laws, in particular, have transferred enormous
discretionary powers to central government's regulatory authorities, and these pose
real issues about protection from arbitrary power, and about the very process of
making laws and holding the administration to account. In other areas, we are likely to
see a more hands-on style of market and corporate regulation, but probably nothing so
radical as to require us to dig out the history books.
Banking legislation is transferring to government authorities huge powers to decide
the future of any bank that looks like wobbling; this includes power to make
subordinate legislation that overrides private property and contractual rights, that
overrides other statutes, and that can even be retrospective. In effect, this legislative
activity decides nothing, but delegates all decisional powers to government.
Emergency legislation has always been like that. The two World Wars saw
Parliament's legislative importance almost entirely sidelined. And in peace time,
security emergencies or threats since the 11th of September 2001 saw worrying shifts of
power to governments. Stricter migration controls were frequently justified by
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∗ Law Faculty, University of New South Wales. The author would like to thank Emilios
Avgouleas, Keven Booker, Ross Buckley, Peter Cane, Phil Cooper, David Dixon, David
Dyzenhaus, Arthur Glass, Matthew Groves, Carol Harlow, Martin Krygier, Janet McLean,
Keith Mason, David Raper, Mike Taggart, and Greg Weeks.
1 The so-called 'dustbin of history' is almost empty. Barzun attributed the phrase to
Augustine Birrell, an English MP, not (as commonly supposed) Karl Marx: Jacques Barzun,
From Dawn to Decadence: 500 Years of Western Cultural Life — 1500 the Present (2000), xviii.
166 Federal Law Review Volume 37
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reference to concerns for national security.2 The new banking legislation should bring
back into prominence long-standing debates about subordinate legislation — its
implications for the balance between Executive and Parliamentary power; the
processes by which it is proposed, debated and scrutinised; the propriety of skeleton
Acts which leave all policy to subordinate legislation; and where policy-making is so
delegated, the democratic legitimacy of making laws in an environment that is
constructed in such a way as to avoid the hazards of direct engagement in partisan
politics.3
Running in parallel with these concerns about the new banking legislation are
similar concerns about the processes by which governments have raised and are
spending quite astonishingly large sums of money in an effort to stimulate their ailing
economies. Appropriation Acts have long been skeleton affairs. They authorise
governments to spend lots of money but impose very few enforceable rules on the
spending process; the Acts are largely permissive. The speed with which some of the
stimulus packages were rushed through their legislatures, combined with the sheer
size of the sums involved, prompts further reflection on whether democratic
legitimacy might require more ex post accountability safeguards, even if it is not
feasible to legislate for prior constraints as to how the money will be spent.
Before the global financial crisis, governments had said that they were intent on
downsizing themselves and their regulatory activities, trusting increasingly to the
market as a preferable form of ordering. What they did, however, was often something
quite different. The privatisation of government utilities, in particular, was
accompanied in most places by an exponential growth in regulatory requirements.
Regulatory activity flourished in other areas also, although its forms (contractual,
economic incentives, industry self-regulation and the like) sometimes sought to
camouflage government's leading (if not formally directive) role.4 Carol Harlow
mapped out a remarkable disjunction between the 'small government' rhetoric of
recent governments, and the steady expansion of government regulation and
supervision into areas formerly regarded by liberals as off-limits.5
Predictions can be dangerous, but the financial crisis has been with us long enough
to warrant the effort. The pretence of deregulation has already been dropped in one
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2 For example, Australia's future Prime Minister, Mr Rudd, spoke from the Opposition
benches in strong support of a number of government Bills tightening immigration
controls. He repeatedly emphasised the Bills' importance to national security since 9/11.
See Commonwealth, Parliamentary Debates, House of Representatives, 19 September 2001,
30942–3. The indefinite detention laws which the House of Lords struck down in A v
Secretary of State for the Home Department [2005] 2 AC 68 had applied only to foreigners;
indeed, that was the reason for their invalidation. Australia's mandatory detention laws
had been on the books for a decade before 9/11, but the Federal Court had found an
interpretive way around them until the High Court disagreed in Al-Kateb v Godwin (2004)
219 CLR 562.
3 See Edward C Page, Governing by Numbers: Delegated Legislation and Everyday Policy-Making
(2001) 1-18.
4 Carol Harlow, 'The "Hidden Paw" of the State and the Publicisation of Private Law', in
David Dyzenhaus, Murray Hunt and Grant Huscroft (eds), A Simple Common Lawyer: Essays
in Honour of Michael Taggart (2009), 75-98, 83, noting that talk of 'decentred regulation' can
be quite misleading.
5 Ibid 75-98.
2009 The Great Depression, this Depression, and Administrative Law 167
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area. It seems fairly clear that we can expect the financial services industry to be
brought more directly under government regulation, and that there will be a lot more
regulatory requirements. We can expect to see more emphasis on market transparency
and stricter rules about conflicts of interest. We might even see regulation come to the
parallel universe of the derivatives market. This will all be done in the name of
correcting market failures; the aspiration to a better-functioning market economy will
not be shed. Government 'controls' of banks will necessarily be different, if only
because big banks have become too important to fail. The language will be still be of
'regulation', but that is a word of many meanings. So far as it implies rules published
in advance designed to influence peoples' conduct, it might be more appropriate to
talk of the new banking laws in terms of 'managerial oversight', 'risk avoidance', and
'harm minimisation', or (as to this last term and more prosaically) 'cleaning up the
mess'.6
B THE GREAT DEPRESSION AND ADMINISTRATIVE LAW
This is not the place and I am not the person to write a history of administrative law
scholarship, but in the histories that have been written so far, it would appear that the
United States is exceptional in giving prominence to the Great Depression, which is
taken as the major causative factor behind the passage of their Administrative Procedure
Act 1946 (US) (‘APA’).
English histories acknowledge the rapid growth of the administrative state in the
1930s, but the Great Depression rarely figures as an important period in the
development of English administrative law. One reason might be that the country's
administrative bureaucracies had a considerably longer history, with political
arguments about its 'collectivist'7 implications preceding the Depression. Maitland8
and Dicey painted very different pictures of the machinery of the modern state, and
Dicey's antagonism to a separate institutional structure for adjudicating disputes
between state and subject is well-known.9 However, with the exception of accounts of
the steps taken to assert a measure of parliamentary control over the making and
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6 Parallels might be drawn with police law and practice. Prime Minister Thatcher preached
the virtues of small government and reduced red tape, but her most important reform of
police law (the Police and Criminal Evidence Act 1984 (UK)) did two things; it radically
widened police investigative powers, and introduced a raft of regulations which for the
first time offered genuine protection to criminal suspects. Prime Minister Blair's
government broadened the focus to pre-emptive interventions, not against those suspected
of crime but those likely to commit it. The protective regulatory environment has retreated
in consequence. There is always a time lag, but Australia has followed suit. See David
Dixon, 'Authorise and Regulate: a Comparative Perspective on the Rise and Fall of a
Regulatory Strategy', in Ed Cape and Richard Young (eds), Regulating Policing: the Police
and Criminal Evidence Act 1984 Past, Present and Future (2008) 21.
7 Dicey's term: see Albert Venn Dicey, Lectures on the Relation Between Law and Public Opinion
in England During the Nineteenth Century (1905), 259-302.
8 See especially Frederic William Maitland, The Constitutional History of England: A Course of
Lectures (1908) 505–6.
9 His version of the rule of law required such disputes to be adjudicated in the 'ordinary
courts': Albert Venn Dicey, Introduction to the Study of the Law of the Constitution (10th ed,
1959) 193.
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