Economic essays

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Monograph

Identifikator:: 1753623200

URN:: urn:nbn:de:zbw-retromon-136107

Document type:: Monograph

Title:: Economic essays

Place of publication:: New York

Publisher:: Macmillan

Year of publication:: 1927

Scope:: viii, 368 S.; Ill., graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: The enterpreneur and the supply of capital / George E. Barnett

Collection:: Economics Books

THE ENTREPRENEUR AND THE SUPPLY OF CAPITAL 19 be briefly enumerated. In the first place, the great size of the business unit made it impossible for individual business managers or groups of managers to raise the necessary capital. Secondly and even more important, the form of the capital required— fixed in place of circulating—made it impossible for the business manager to acquire control by the means of commercial bank loans. Such loans, since they were made largely on the basis of business ability, could not be used in a large way as a means of acquiring the means of production when these had a length of life frequently transcending that of the individual. A third factor in reducing business ability to a contractual position has been the enormous growth of monopoly and quasi-monopoly profits. These profits in many concerns are both large and durable. Of this momentous change in distribution the corporate form of organization is the expression.’ It is interesting to observe the place which this great trans- formation played in the development of the new theory of profits. As far as can be ascertained it was never assigned its true role as the actual moving force by the authors of the newer theories of profits. Again, it was observation and not the study of chang- ing conditions which dominated the theorizing. Thus the cor- poration figures frequently, but merely as an illustration of the subordination of managerial ability. Thus Professor Clark says: That the capitalist, manager and the owner of the product may at times be one and the same person does not affect the analysis. The three functions are distinct and the rewards attaching to them are equally so. The growth of corporations tends in a practical way to separate these functions. Capitalists are here a body of stockholders, bondholders and business creditors, managers are a body of salaried officials; while entrepreneurs, in the limited sense of the term, are the stockholders. Pure profit resides in the portion of the dividends that is in excess of current interest on the paid-up capital.? In most of the modern text-books the same illustrative use is made of the corporation. 'Tt is to be noted that it is not the mere corporate form which is important in this connection. Many corporations are nothing more than convenient legal forms for carrying on business. In many of these, business ability still holds ownership and takes profits. Indeed, the corporation may be made an important instrument in securing such ownership by the business manager. But in the greatest of modern corporations, business ability is hired. Many of the modern problems of corporations—banker’s control, non-voting stock, the wrongs of minority stockholders, etc.—are the accompaniments of this transition. 2 Ibid., p. 39.

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