_The Entrepreneur a Passive Functionary under Static Conditions._--Purely passive is the function of the _entrepreneur_ under static conditions. In so far as any effect on his income is concerned he might as well reside in a foreign land as in the one where his business is located, provided always that the management were unaffected. When the same man is both _entrepreneur_ and manager, the absence of the first of these functionaries would mean the absence also of the second, and that would cause trouble; but the purely mercantile operation of getting a title to a product and then surrendering it can be carried on as well in one place as in another. The _entrepreneur_ in his capacity of buyer and seller does not even do the work which purchases and sales involve. That is commonly done by agents. Some of it, of course, may be done by the responsible manager himself, and if that person is also the _entrepreneur_, it follows that he does a part of the commercial labor of his business. In this, however, he goes beyond his function as _entrepreneur_. In that capacity he does, as we have said, no labor of any kind. Sales and purchases are made in his name, but he does none of the work that leads up to them.[1] [1] The holders of common stock in a corporation are always _entrepreneurs_, and they are also capitalists if the stock represents any real capital actually paid in. If the bonds and the preferred stock represent all the real capital that there is, any dividends that may be paid on the common stock are a pure _entrepreneur's_ profit. If, on the other hand, the stock all represents money actually put into the business, the dividends on it contain an element of net profit if they exceed simple interest on the capital and insurance against the risks that are not guarded against by actual insurance policies. If the rate of simple interest is four per cent, and the value of the unavoidable risk is one per cent, then a dividend of six per cent contains a pure _entrepreneur's_ profit of one per cent. In dynamic conditions such a return is often to be expected, and we shall soon study the conditions that afford it.