by Gary Alexander
February 11, 2025
On January 28th, 2025, the day I began sailing on the latest Jazz Cruise, stock for Royal Caribbean Cruises (RCL), the parent company for the cruise line on which we sailed, soared over 12%, as the company reported stellar earnings. In three post-COVID years. RCL has delivered a 47% compound annual growth rate (CAGR) and quadrupled its stock price. This is partly due to the boom in Baby Boomer finances. Unfortunately for me, I’m not a Boomer, that frisky consort of jet-setting youngsters. My wife and I were born late in the “Silent Generation” (WW2 years), and these cruise trips, long flights and airports will have to get along without us in future years, but cruise lines should continue to thrive.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Royal Caribbean was $62.72 two years ago, on January 30, 2023. It doubled to $125.77 on January 30, 2024, and now it has more than doubled again in the last year to $274.79 on January 30, 2025. I wish I could say I owned some shares (I don’t), but I’ve certainly contributed to their earnings, on jazz cruises.
Today I abandon ship and fly home after an eventful fortnight, to say the least, but let’s turn to the high finance of cruising long ago. Last week, I began this column writing about a couple of state-run shipping monopolies that got busted by our Founding Fathers, first the British East India tea monopoly, ending with the Boston Tea Party, and then the Fulton-Livingston New York-Hudson River state-run steamboat monopoly, broken up by Cornelius Vanderbilt and partners in a landmark 1824 Supreme Court decision.
This week I’ll show you how the Commodore (as Vanderbilt was known) broke up a series of trans-oceanic shipping scams, where British and U.S. postal monopolies underwrote some posh cruising.
In 1838, the British began regular Trans-Atlantic steamboat service, and the usual hustlers rushed to set up sweetheart deals with the crown. Samuel Cunard won. He convinced the British government to give him $275,000 a year to run the mails. Cunard then profited by charging $200 per passenger per crossing.
On the American side of the pond, Edward K. Collins wangled an even better deal with the U.S. Congress, which agreed to give him $3 million down and $385,000 a year for building five ships to “outrace the Cunarders” and “drive them from sea,” while underwriting trans-Atlantic mail delivery.
Congress gave Collins (and two Pacific Coast outfits) buckets of money, but these hucksters took years to build their ships because “Collins had champagne taste with taxpayer money,” according to Burton Folsom, Jr., author of “The Myth of the Robber Barons.” Collins build four (not five) luxurious ships, so he went to Congress for more money, a raise to $858,000 a year ($33,000 per voyage), which works out to $1.3 million in today’s dollars for each of 26 trips. (To account for inflation, multiply all figures by 40).
This sweetheart deal was a combination of the “mail monopoly” and “shipping monopoly,” both state-run, so Cornelius Vanderbilt stepped in to save free enterprise yet again! After watching this nonsense for a decade, he offered to deliver the mail across the Atlantic for less than half of what Collins was charging.
Collins was terrified of the competition, so he tried to get Vanderbilt to join him in his monopoly racket, to no avail. Vanderbilt offered to run the Atlantic mail route for $15,000 per trip. As often happens, though, Congress was in Collin’s pocket, so they refused Vanderbilt’s offer to save 55% on mail delivery, which means Congress kept paying Collins $33,000 per trip, rather taking up Vanderbilt’s $15,000 offer.
So, Vanderbilt went private, charging 15-cents per letter, while offering lower passengers fares, too, including third-class steerage for $75 per voyage, not as luxurious but in better-built ships. Collins’ ships had luxurious fittings, but they leaked and vibrated, requiring days of repairs after each crossing. Two of Collins’ four ships eventually sank, killing almost 500 passengers, so he used federal money to build another ship – so poorly that it only lasted only two trips before being sold at a $900,000+ loss.
For the decade between 1848 and 1858, the U.S. government paid Edward Collins and two California-based shipping monopolies $11 million ($400+ million in today’s money) to build ships and carry mail. Vanderbilt took on all three competitors at no charge and beat them all. Folsom concluded, “Vanderbilt’s victory marked the end of political entrepreneurship in the American steamship business.” That’s when railroads began taking over America’s domestic commerce, and Vanderbilt soon dominated that business.
Vanderbilt took his steamship profits and built the New York Central Railroad, soon running to Chicago and beyond, but that’s a story for another day. For now, I’ll conclude with part of my first run at big ships.
My First Published Economics Article (57 Years Ago) Was Also About Big Ships
Just out of college in the fall of 1967, I soon became immersed in economic statistics at our college News Bureau. I actually began my college career in that News Bureau, but on the janitor crew, where I dusted the desks and buffed the floors, while being more interested in the ticker tapes from AP, UPI and Reuters.
After graduation, I got a job there providing data for charts, writing booklets and scripts for our radio/TV speakers, and then I began writing articles for our magazines. On the afternoon of Friday, November 17, 1967, as I was digging through The Journal of Commerce for Japanese shipping tonnages for a series of articles I co-authored with our Dean of Students, who had just returned from a fact-finding trip to Tokyo, I came across tonnage figures for Japanese ships, and became convinced that Japan was building these monster ships in order to become a major exporter, so I co-authored an article appearing in the January 1968 edition of The Plain Truth magazine, titled, “Japan: Industrial Super-giant.” Japan was not yet a super-giant, but we foresaw its rise long before others did. Here’s how I spun those shipbuilding statistics:
“In December 1966, the latest behemoth was launched, Idemitsu-Maru, a 210,000 dead-weight ton (DWT) tanker, measuring 1,122 feet in length (longer than the Eiffel Tower is high), and generating 100,000-horsepower. How much cargo can it hold? It staggers the imagination! The Idemitsu-Maru could hold enough gasoline to drive 750-cars to the moon and back, AND enough kerosene to cook a big breakfast for every person on the face of the earth (and have enough left over to cook dinner for everybody, too). AND enough diesel fuel to drive 900-heavy trucks around the world at the equator, AND still have enough fuel left in its hull to generate electricity to light all the light bulbs in Japan for two weeks!”
— By Gary Alexander, “Japan: Industrial Supergiant,” Plain Truth magazine, January 1968
What makes that November date so memorable is that I was so immersed in this shipping data that when I came down the office stairs that fall Friday in 1967, my future wife was talking with a friend, bemoaning her near engagement to another fellow, and I foolishly blurted out (with my mind still on Japanese ships), “Have you ever considered me?” She immediately said, “Yes I have, but you never give me the time of day!” Oops! I suddenly saw this very good friend as a wonderful woman; we dated daily, were engaged two weeks later and married six weeks later, in January 1968 – when my Japan article was published.
Born in the war years, we old timers have seen Japan fall, recover, then fall and recover again, twice in our lifetimes, first from military overreach, and then economic overreach – but we’re still together 57 years after my bumbling proposal. As you read this on February 11th, jazz fans disembark from my final Florida Jazz Cruise, a great ride, highly recommended, but next time for some younger bodies than ours.
Navellier & Associates owns Royal Caribbean Group (RCL), in managed accounts. Gary Alexander does not own Royal Caribbean Group (RCL), personally.
All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.
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Income Mail by Bryan Perry
Market Leadership Moves Beyond the Magnificent Seven
Growth Mail by Gary Alexander
Comparing Cruising Stocks from Long Ago to Now
Global Mail by Ivan Martchev
Will We See Another “Groundhog” Week?
Sector Spotlight by Jason Bodner
Don’t Fall Victim to “Recency Bias” (Take a History Pill)
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About The Author
Gary Alexander
SENIOR EDITOR
Gary Alexander has been Senior Writer at Navellier since 2009. He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks. For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.
Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s. He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division. Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander
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