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Happy Buyers!! Congratulations Mark & Mary.

Congratulations to our clients Mark and Mary Minotti of Property Circle LLC on the purchase of their North Haven, CT project/flip house today.

Over the next few months, they will tastefully update this 1950’s ranch home into a 2019 Dream Home. Watch the renovation progress on this blog as their project unfolds.

This transformed home will be available for purchase just in time for our spring 2019 buying market. It’s ideally located close to the new Amazon Distribution Center and the North Haven Campus. Potential buyers who are interested in getting on the waitlist for this one should contact me.

Contact Rick Bassett

 

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The impact of infrastructure spending on the Federal Gasoline Tax

Today (June 6th) marks the 85th anniversary of The Revenue Act of 1932.  The Tax Act was designed to close a significant federal deficit (general fund) gap of just over $1 billion at the time. A component of the 1932 Tax Act was a 1 cent/gallon temporary gas/fuel tax that was scheduled to expire in 1934, this tax is known as the Federal excise tax on gasoline. Initially this excise tax was intended strictly for deficit reduction and not dedicated to building or maintaining infrastructure (roads and bridges).

Like all taxes, the Federal excise tax on gasoline never expired but it expanded. Today the excise tax sits at 18.4 cents/gallon for gasoline and 24.4 cents/gallon for diesel where it has remained steady since 1997 (the Clinton Administration). From it’s origins in 1932 until 1997 the excise tax was split in various percentages between deficit reduction (general fund) and infrastructure (Highway Trust Fund) but in 1997 President Clinton redirected the entire excise tax (100% of it) to the Highway Trust Fund. The Highway Trust Fund takes in about $35 billion a year from the Federal excise tax, which many lawmakers argue is insufficient to the tune of about $15 billion annually for maintaining the Nation’s infrastructure. Many lawmakers, including the normally tax increase adverse GOP,  have been calling for increases on this Federal excise tax for many years arguing that it is a consumption tax that pays for the infrastructure which it’s consumers (travelers) are using. 

Trump’s Infrastructure Plan: Trump has proposed to spend $1 trillion over 10 years on critical infrastructure spending plan to rebuild the country’s roads, bridges, airports, electric grid and water systems. Washington insiders have pegged the realistic direct federal spending on infrastructure much lower than $1 trillion at a range of $200 – $300 billion dollars, which is still significant. This is no clear pathway for Congress on how they would find the lower number of $300 billion in new money to pay for this plan. With funding details for this plan currently  about as clear as mud, the one thing for certain is that consumers can expect to pay significantly more at the pump in terms of Federal excise tax.

If just $300 billion of new infrastructure spending is approved over 10 years, it would translate to the Federal excise tax on gasoline increasing by 15.77 cents/gallon to 34.17 cents/gallon assuming consumers had to foot the entire bill.

Some of the obvious benefits of the proposed increased in infrastructure spending include: fixing a crumbling infrastructure that is badly in need of repair, lower vehicle repair costs to drivers caused by poorly maintained roadways, a safer transportation system, more jobs and less pollution emissions given that the higher cost of driving will reduce the amount of driving that takes place.

The big downside of the increased infrastructure spending is the additional pain at the pump for consumers and truck drivers. As most drivers know, the Federal excise tax isn’t the only tax that they pay at the pump. Drivers also pay State & Local gas taxes that vary from 12.25 cent/gallon in Alaska to 58.20 cents/gallon in Pennsylvania (30.64 and 76.60 cents respectably with the Federal excise tax included). The table above illustrates the State gas tax rates per gallon ranked from highest to lowest.

An increase in the Federal excise tax of 15.77 cents to cover the $300 billion in new infrastructure spending would translate into a 20 – 50% tax increase at the pump. In real dollars the increased tax equates to an additional $165 per year / per car that consumes 20 gallons per week.

If for some reason the entire $1 trillion in infrastructure spending was approved and passed onto consumers at the pump, which is highly unlikely, then it would translate into an increase in the Federal excise tax of nearly 50 cents per gallon representing a  65 – 163% tax increase at the pump with out of pocket cost to consumers increasing in excess of $500 per year / per car that consumes 20 gallons per week.

The silver lining in this $1 trillion cloud is that the increased tax would probably put the U.S. into compliance with the Paris Climate Agreement by significantly reducing the number of cars on the road and thereby reducing our emissions.

So the question is do we root for higher Federal excise taxes given that the societal benefit seem to be substantial while on the other side of the ledger the penalties for low-wage earners would be potentially devastating?

 

Rick Bassett

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Charles Goodyear – New Haven based Inventor that turned Naugatuck into the Rubber Capital of the World

Charles Goodyear

Charles Goodyear

Charles Goodyear was born in New Haven, Connecticut on this day (Dec 29th) in 1800 and is best known for patenting a process known as vulcanization.

Amasa Goodyear, Charles’s father, opened the first US manufacturer of pearl buttons in the town of Naugatuck, CT in 1807, which supplied the US government with its entire inventory of metal buttons during the war of 1812. Charles was raised in Naugatuck, CT. where he learned the button trade and worked on the family farm as a young man. His enterprising father encouraged Charles to move to Philadelphia and take up an apprenticeship in a company called Rogers and Brothers.

After his apprenticeship, Charles partnered with his father to open the first domestic hardware store in Philadelphia, which is believed to be the first of it’s kind in the United States. While they enjoyed some success in the early years of the venture, it came crashing down in 1830.

In the early 1830’s the bankrupt Charles Goodyear was introduced to rubber at the Roxbury India Rubber Company in New York City where the proprietor explained that while rubber was a fine product in climate friendly Brazil, it wasn’t well suited for the extreme climates of the Northeast US as it had several fatal flaws; it melted in the summer while emitting a terrible smell and cracked in the winter.

Philadelphia County Debtor's Prison (source: getoutofdebt.org)

Philadelphia County Debtor’s Prison

Charles was thrown into debtor’s prison soon after returning to Philadelphia, due to his failure to pay off his creditors. He kept himself occupied with solving the flaws of rubber during his time in prison.

Speculation in the Rubber Industry in the 1830’s caused many investors to lose great sums of money as the promise of the miracle material from Brazil had failed to live up to commercial expectations. By 1835 the US based rubber industry was bust and abandoned by most investors.

Charles Goodyear Patent 3633

Charles Goodyear Patent #3633

Undeterred by the failure of rubber, Charles has a vision for 100’s of commercial applications for rubber including soles for shoes, frogmen suits,, life preservers and many more. He had virtually no resources, no formal training as chemist and his education wasn’t very deep but after many attempts over nearly 15 years to turn rubber into a commercially viable material he would develop a patented process known as vulcanization, which he received his patent for in 1844. Goodyear’s vulcanization process solved the problem of the fatal flaws that most commercial rubber manufactures in 1830’s were unable to solve.

More than sixty additional patents were granted to Goodyear for the application of his original vulcanization process for various uses, including rubber condoms, intrauterine devices, douching syringes, and “womb veils” (diaphragms).

Goodyear Metallic Rubber Shoe Company, Naugatuck, ca. 1900 (Source: http://connecticuthistory.org)

Goodyear Metallic Rubber Shoe Company, Naugatuck, ca. 1900

In 1844 Goodyear built a rubber factory in Naugatuck, which turned it into the rubber capital of the United States and put Naugatuck, Connecticut, on the map as rubber manufacturing capital during the 19th and 20th centuries.

While earning limited fame for his process, Goodyear didn’t financially profit from it as he spent all of his resources during his later years defending his patents in an estimated 32 patent infringement cases. He was in and out of debtor’s prisons in the US, England and France at least 5 times during his lifetime for running up bills which he couldn’t satisfy.

His business acumen never matched his inventive prowess as he made bad deals, failed to patent his process aboard, extended credit to people who couldn’t pay and charged far too small of a royalty percentage on his prized patent, which was the opposite problem that Eli Whitney experienced with the Cotton Gin.

Charles is buried in New Haven at Grove Street Cemetery.

Charles is buried in New Haven at Grove Street Cemetery.

From about the age of 30 through the balance of his life, he was in poor health, him and his wife lost 6 of their 12 children and his family lived in extreme poverty. When he died in 1860 he was nearly $200,000 in debt.

The family did receive modest royalties on Charles’s patents until 1865, which helped them to offset the effects of extreme poverty that they had lived with from 1830 – 1860. They sold the rights to the patents in 1865 just as they were due to expire.

Charles Goodyear had nothing to do with the Goodyear Tire & Rubber Company, which was founded in 1898 by Frank Seiberling 38 years after his death.

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Tommy Flowers – Developed the Computer that beat Hitler

Tommy Flowers Screenshot 2015-12-21 07.50.21

Tommy Flowers

Thomas “Tommy” Flowers is perhaps one of the most important and least known people in modern computing history. Born on this date, Dec 22, in 1905,  Flowers developed the first electronic programmable computer, known as Colossus.

Colossus was designed specifically for decoding intercepted communication between the top leadership of the Nazi party including Hitler, Admiral Durnetz and Field Marshall Rommel as well as their generals on the battlefront. The Germans entrusted their most secret messages to a machine known as the Lorenz SZ40 cipher system, which they used from 1941 until the end of World War II in 1945. It was Flowers who developed the computer that was able to secretly decipher the messages of the Nazi high command.

Flowers was a British engineer that was hand picked by Max Newman to be part of a special team at Bletchley Park to improve the semi-automated decoding process of the Lorenzo Cipher. When Flowers arrived at  Bletchley Park in 1941 most of the decoding was being done by hand and on a rudimentary machine known as ‘Robinson’. The process was painstakingly slow and error prone.

Flowers proposed building a different type of decoding machine that was based on 1,800 thermion valves (vacuum tubes) that would serve as of series high speed reliable electronic logic gates. The idea was so radically different that his superiors refused to provide a budget for the project thus forcing him to fund a great deal of the project with his own money to the tune of over £1000. £1000 was a considerable amount of money in 1941 and Tommy Flowers was not a wealthy man.

During the time that Flowers and his team were building the Colossus at his Dollis Hill laboratory, 1941 to late 1943, the German’s improved their level of encryption several times on the Lorenz thus significantly reducing the number of intercepted messages that could be decrypted by the codebreakers and the Robinson.

Colossus

Colossus

Flowers first generation Colossus was delivered and installed on February 5, 1944, it was immediately put to work. The Colossus quickly doubled the codebreakers output and silenced the critics at Bletchley Park. The new computer eliminated the synchronised tapes of the Robinson, boasted superior speeds by a factor over 5 times and was also much more reliable, due to Flowers’ redesigned counters and the use of valves in place of relays throughout.

The Bletchley Park authorities immediately ordered 4 more units from Flowers and insisted that the next one be delivered by June 1, 1944. After many sleepless nights and considerable stress, Flowers and his team had Colossus II operational on time. The new machine was faster and more reliable than it’s predecessor. 

Code Breakers at Bletchly Park

Code Breakers at Bletchly Park

On June 5, 1944 the codebreaking team was able to successfully decode a message from Adolf Hitler to Field Marshall Rommel and other his high command leaders on the strategy for defending the Western Front (the Atlantic Wall) against an Allied invasion. Hitler believed that the Allied forces would invade Normandy as a decoy to draw the German defenses away from what he felt was their true invasion spot of France’s Pas de Calais region. Hitler had the Pas de Calais region well fortified and did not want his military resources to be redeployed to Normandy for what he believed was a red herring.  He ordered all of his commanders to stand firm for 5 days if the Allied forces launched an assault of Normandy as he didn’t want to weaken his strong hold positions.

Bletchley Park immediately passed the intercept onto the Americans and General Eisenhower  issued the order to launch a full scale invasion, known as D-Day, at Normandy for the very next day, June 6, 1944. He knew from Hitler’s broken communication that he would have the element of surprise and ample time to overwhelm the defending German forces on Omaha Beach.

remembering-d-day-1The hard fought victory for the Allies at D-Day was the turning point in the war in that it allowed the Allied troops the ability to advance by land into Germany. World War II was over with a year from D-Day.

The German high command continued to use the Lorenz Ciper Machines after D-Day but they changed the frequency of the encryption key decoding on a more regular basis. Several Colossus (aka Colossi) computers were dedicated to just breaking the ever-changing key decoding while several others were used to decode the actual communication. By the time the war ended in 1945 there were 10 Colossus computers in active service.

The entire Colossus program was classified,  8 of the Colossus computers were disassembled immediately at the conclusion of the war and the remaining 2 were disassembled in 1958-60.

For Tommy and Colossus, the work that was done at Bletchley Park was to remain a secret for a very long time. Tommy Flowers kept his word and remained silent about his contribution to the war effort. No doubt others benefited from his work, but Tommy did not. He never revealed these secrets, only doing so when the restriction was lifted.

The American Government was given the details of Colossus by the British Government as part payment for all the food and armaments America had supplied throughout the war. It’s rumored that many of the technical specifications of Colossus were shared with the team that was developing ENIAC at the University of Pennsylvania.

The secret Colossus program was initially revealed by the USA’s Freedom of Information Bill in 1970 and the release of the information Britain had given the USA.

Recognition came after the release of the Colossus information but much too late to give Tommy any real benefit. He received an honorary doctorate from Newcastle University in 1977, and another from De Montfort University in Leicester. More was planned. It became known that he was being considered for a knighthood, possibly in the New Years Honors List.  Sadly, Tommy Flowers died from heart failure at home in London on October 28, 1998. He was 92.

Flowers significant contributions in computer science have been credited by Prime Minister Winston Churchill and General Dwight Eisenhower with shortening World War II by at least 2 years and saving at least hundreds of thousands of lives.

 

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Duryea Motors – The 1st Commercial Car Manufacturer in America

Charles (left) and Frank Duryea in their 1893 Duryea gasoline car. From Outing magazine Vol 51 Pub. 1908

Charles (left) and Frank Duryea in their 1893 Duryea gasoline car. From Outing magazine Vol 51 Pub. 1908

Charles Duryea was born on this day (Dec 15) in 1861. Charles and his brother Frank were bicycle makers who in 1896 would go on to be the first to commercially serial produce vehicles in America. They did so under the name of the Duryea Motor Wagon Company in what was the largest automobile factory in the United States at the time.

In 1886 Charles became interested in the operation of a gasoline engine which he observed at the Ohio State Fair and began designing an engine of his own. Over the next 7 years Charles and Frank designed a prototype of an automobile which utilized that engine.

In 1893 Frank Duryea publicly road-tested their first gasoline powered automobile known as the Buggyaut in Springfield MA.  The automobile was a wagon with a 4 HP single cylinder gasoline engine. There was much fanfare and the vehicle was deemed to be promising despite traveling less than 600 feet before a belt failed and ending the maiden voyage.

On Thanksgiving 1895 Frank won first place and $2,000 in prize money in the first motor car race in America driving an 1895 Duryea, which was their 2nd car produced. It was a 50 mile race that went from Chicago to Evanston and back that took about 9 hours at average speeds of just under 6 MPH.

Encouraged by their successes, the Duryea Motor Wagon Company of Springfield, MA produced 13 identical cars known as ‘The Duryea Motor Wagon’ by hand in 1896, 10 of which were sold in the United States. Their cars were the first commercial produced automobile available for purchase in America.

In May 1896 one of the Duryea Motor Wagons was involved in the first recorded automobile accident in American. In New York City motorist Henry Wells hit a bicyclist with his new Duryea. The rider suffers a broken leg, Wells spent the night in jail in the nation’s first traffic accident.

In 1898 the Duryea brothers went their separate ways and the Duryea Motor Wagon Company was closed over personal and business disputes.

Charles Duryea

Charles Duryea

Charles, eight years older than Frank had been known to take advantage of Frank in publicity and patents.

Charles was a visionary with more than 50 patents, and a shameless self-promoter whose ideas were brought to life by his younger brother, Frank, a master mechanical engineer with 20 patents of his own. (Vogrin, B)

Frank went out on his own and eventually joined with Stevens Arms and Tool Company to form the Stevens-Duryea Company which was sold to Westinghouse in 1915.

Frank Duryea

Frank Duryea

Charles tried to produce some of his own designs with various companies until 1916. Thereafter he limited himself to writing technical book and articles. He died in 1938.

Frank received $500,000 in the Westinghouse deal and lived in comfort on the Connecticut shoreline in Madison and then later in Old Saybrook until his death in 1967,  just seven months shy of his 98th birthday.

While not a commercially successful venture; The Duryea Motor Wagon Company did pave the way for mass production in the automobile industry by being the first to serially produce (and reproduce) identical cars for sale.