Volume 2, Issue 12
Lifestyle & Financial Newsletter
December 2012
Inside this issue:
The Tea Act
Page
- http://www.bostonteapartyship.com
The Tea Act: The Catalyst of
the Boston Tea Party
The Tea Act, passed by Parliament on May 10, 1773,
granted the British East India
Company Tea a monopoly on
tea sales in the American colonies. This was what ultimately
compelled a group of Sons of
Liberty members on the night
of December 16, 1773 to disguise themselves as Mohawk
Indians, board three ships
moored in Boston Harbor, and
destroy over 92,000 pounds of
tea. The Tea Act was the final
straw in a series of unpopular
policies and taxes imposed by
Britain on her American colonies. The policy ignited a
“powder keg” of opposition and
resentment among American
colonists and was the catalyst
of the Boston Tea Party . The
passing of the Tea Act imposed no new taxes on the
American colonies. The tax on
tea had existed since the passing of the 1767 Townshend
Revenue Act. Along with tea,
the Townshend Revenue Act
also taxed glass, lead, oil, paint,
and paper. Due to boycotts and
protests, the Townshend Revenue Act’s taxes were repealed
on all commodities except tea in
1770. The tea tax was kept in
order to maintain Parliament’s
right to tax the colonies. The
Tea Act was not intended to
anger American colonists, instead it was meant to be a bailout policy to get the British East
India Company out of debt. The
British East India Company was
suffering from massive amounts
of debts incurred primarily from
annual contractual payments
due to the British government
totaling £400,000 per year. Additionally, the British East India
Company was suffering
financially as a result of unstable political and economic
issues in India, and European
markets were weak due to
debts from the French and
Indian War among other
things. Besides the tax on tea
which had been in place
since 1767, what fundamentally angered the American
colonists about the Tea Act
was the British East India
Company’s government sanctioned monopoly on tea.
(Continued on page 3 )
The Tea Act
1,3-4
How Much Lower
Can Bonds Go?
1-2,4
Office News
2
Recipe ala Harris
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Harris Wealth Management
4160 Washington Road
Suite 1
McMurray, PA 15317
Phone: 724-942-3300
Fax: 724-942-3313
www.harriswm.com
Email our staff:
[email protected]
[email protected]
[email protected]
How Much Lower Can Bonds Go?
Government bonds, outside the Eurozone’s periphery, have been among the
best performers over the last few years as investors have sought a safe haven.
The volatility experienced by most stock markets has further bolstered the allure of government bonds.
A terrific column in the Financial Times, “Bond buyers should be mindful of history,” by Burton Malkiel, Princeton University professor emeritus of economics,
says investors have been fleeing to “safety.” Ten-year U.S. Treasury yields fell to
less than 1.5 percent in early June, a level not witnessed since 1946. German 10year yields fell to an all-time low near 1 percent.
Securities and Advisory
Services offered through
LPL Financial, a Registered
Investment Advisor.
Member FINRA/SIPC.
The opinions expressed in
this material are for general information only and
are not intended to provide specific advice or recommendations for any individual. To determine
what may be appropriate
for you, consult your financial advisor.
(Continued on page 2)
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Volume 2, Issue 12
OFFICE NEWS
We at Harris Wealth Management
hope you and your have a happy
holiday season!
The office will be closed:
Friday December 21, 2012 at noon
And will re-open:
Watch your thoughts, for
they become words.
Watch your words, for
they become actions.
Watch your actions, for
they become habits.
Watch your habits, for
they become character.
Watch your character, for
it becomes your destiny.
-Author Unknown
Wednesday, December 26, 2012
As well as:
Monday, December 31, 2012 at noon
And will re-open
“I have retired over 200
times, so you only have to
retire once!SM”
— Edward J. Harris, CPA
Wednesday, January 2, 2012
How Much Lower Can Bonds Go?
(continued from pg 1)
Some very short-term Federal rates were negative, implying that investors were willing to pay financially stable governments for the privilege of holding their money. According to Malkiel, investors appear to be far
more concerned with the “return of” rather than the “return on” their money.
Since 2008, investors have moved more than $1 trillion from equity to bond funds. Similar shifts from equities to bonds have characterized U.S. pension fund allocations. But, does this flight to so-called havens really
provide investors with the protection they desire? Or, are bond buyers making a huge mistake that is likely
to guarantee them a period of negative “real” (after-inflation) returns? The answer is almost certainly the latter. Malkiel says bonds in countries such as Japan, Germany, and the U.S. are more expensive than any other
time in history. He believes bond investors face virtually sure losses, and equities are the most attractive
they’ve been in a generation.
Malkiel notes what happened to bond investors the last time Treasury bond yields were at 1.5 percent in
1946. Bond yields remained pegged at low rates until the early 1950s to enable the government to more easily finance debt from World War II. Therefore, bond prices remained fairly stable. Moderate inflation, however, reduced the real value of both coupon payments and the face value of the bonds, and bond holders lost
considerable purchasing power. And, that was only the beginning of the pain.
(Continued on page 4 )
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Volume 2, Issue 12
The Tea Act
(continued from pg 1)
Provisions of the Tea Act
Prior to the Tea Act, the British East India Company
Tea was required to exclusively sell its tea at auction in
London. This required the British East India Company
to pay a tax per pound of tea sold which added to the
company’s financial burdens. The Tea Act aborted this
restriction and granted the British East India Company
license to export their tea to the American colonies.
This opened up the British East India Company’s markets to the lucrative American colonies. Additionally,
under the Tea Act, duties Britain charged on tea
shipped to the American colonies would be waived or
refunded upon sale.
(continued on pg 4)
RECIPE ALA HARRIS…
Stained Glass Window Cookies
-www.mrfood.com
Ingredients
•
•
•
•
•
•
1/2 cup (1 stick) butter, softened
1 (12-ounce) package semisweet chocolate chips
1 teaspoon vanilla extract
1 cup chopped walnuts
1 (10.5-ounce) package multi-colored miniature marshmallows
1 cup sweetened flaked coconut
Preparation
1. In a large saucepan, melt butter and chocolate chips over low heat, stirring constantly. Remove saucepan from
heat and stir in vanilla and walnuts. Cool mixture about 15 minutes, until cool but not to the point of hardening.
2. Fold in marshmallows and stir until well coated. Spoon half the mixture lengthwise down the center of an 18-inch
piece of wax paper. Shape into a 12- x 2-inch log and place at one edge of wax paper. Sprinkle 1/2 cup coconut
over remainder of wax paper.
3. Roll log over coconut, evenly coating the outside of the entire log. Wrap log firmly in wax paper, folding ends
snugly. Repeat with the other half of the marshmallow mixture and 1/2 cup coconut.
4. Chill until firm, at least 2 hours or overnight. Unwrap each log and cut into 1/4-inch slices.
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How Much Lower Can Bonds Go?
(continued from pg 2)
Financial history provides numerous examples of market trends that became far overextended and remained
so for lengthy periods. Bond investors have been riding one of the most profitable investment trends in history, so many of them will be reluctant to abandon this strategy until they experience profit erosion. When
that will happen is difficult to say. Investors who own individual bonds in their portfolio that continue to
make sense in this environment may want to stay the course.
Understanding what bonds you own and what to keep or sell is not always easy.
The question remains… How much lower can bonds go?
(NOTE: Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline
as interest rates rise and bonds are subject to availability and change in price. Stock investing involves risk
including loss of principal.)
-The above material was prepared by Peak Advisor Alliance.
The Tea Act
(continued from pg 3)
Seventeen Million Pounds of Unsold Tea
With the passing of the Tea Act, the seventeen million pounds of unsold surplus tea the British East
India Company owned could be sold to markets in the American colonies. The tea was to be shipped to the
American colonies and sold at a reduced rate. The Townshend Revenue Act tea tax remained in place despite proposals to have it waived. American colonists were outraged over the tea tax, which had existed since
the 1767 Townshend Revenue Act and did not get repealed like the other taxes in 1770, and believed the Tea
Act was a tactic to gain colonial support for the tax already enforced. The direct sale of tea by agents of the
British East India Company to the American colonies undercut the business of colonial merchants. Prior to the
Tea Act, colonial merchants purchased tea directly from British markets or smuggled from illegal markets.
They then shipped it back to the colonies for resale. Outraged that American merchants were undercut, colonists initially in Philadelphia and New York refused the British East India Company tea to be offloaded and
sent the ships back to England. In many colonial ports to protest the Tea Act, the shipment of British East India Company Tea was unloaded and left untouched on the docks to rot. The Beaver, Dartmouth, and Eleanor
arrived in Boston in late November to the middle of December 1773. The colonists, led by the Sons of Liberty,
wanted the ships to return to England, and refused the unloading of the ships’ cargo of tea. Lieutenant Governor and Chief Justice of Massachusetts, Thomas Hutchinson, refused to let the ships return to England and
held the Beaver, Dartmouth, and Eleanor in Boston Harbor until matters could be resolved and the tea offloaded. The framework for the Boston Tea Party was set, and on December 16, 1773, 340 chests of British
East India Company Tea were dumped into Boston Harbor by the Sons of Liberty.
We’re on the web:
www.harriswm.com
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