Canals - Business in United States of America

Canals: Alternative Forms of Transportation

Canals: Negative Aspects

Definition: Combinations of natural waterways and engineered improvements that provide water transportation

Significance: Canals opened the American frontier, creating new markets for eastern factories and providing access to the raw materials in the Midwest.

They enabled businesses to become more efficient; however, several states suffered bankruptcies during the 1830’s because of investments in canals.
Small canals were first created in the United States during the late eighteenth century. One canal project, the Powtomack Company, was led by George Washington, who thought that canals offered the nation the best hope of linking its regions into a united country. However, the first major canal to influence American business was the Erie Canal, completed in 1825. Governor DeWitt Clinton persuaded the New York legislature to invest $7 million in the construction of a 363-mile waterway to link Lake Erie in western New York to the Hudson River at Albany. The Hudson’s path through New York City would make that municipality the greatest port in the world. Lake Erie’s connection to the other Great Lakes opened up the frontier (including western Pennsylvania and what would become the states of Ohio, Indiana, Illinois, Michigan, Wisconsin, and Minnesota) to settlers. The completed canal was considered the engineering marvel of the nineteenth century. The benefits of the Erie Canal were immediate; settlers quickly moved west. Freight rates from Buffalo to New York, which had been $100 per ton by road, dropped to $10 per ton for shipments by canal. Whereas freight rates had previously often exceeded the value of the goods being shipped, the canal rates made it economical to ship more kinds of products. In only nine years, the tolls collected on the Erie Canal were sufficient to recoup the entire cost of construction.

The lower freight rates that resulted from the opening of the Erie Canal made New York City the port of choice for both domestic and foreign shippers. Other New York cities benefited as well; almost every major city in the state falls along the trade route established by the Erie Canal. As a result of the economies demonstrated by the Erie Canal, there was a boom in canal construction in other locales, and a search for alternative forms of transportation that might offer similar economies.

Further Reading

• Bernstein, Peter L. Wedding of the Waters: The Erie Canal and the Making of a Great Nation. New York: W. W. Norton, 2005. Engagingly written history of the Erie Canal that considers it in the broad context of nineteenth century American history and demonstrates its impact on national development. 
• Bourne, Russell. Floating West: The Erie and Other American Canals. New York: W. W. Norton, 1992. Series of histories about various American canals; includes bibliographic references. 
• Hecht, Roger W. The Erie Canal Reader, 1790-1950. Syracuse, N.Y.: Syracuse University Press, 2003. Collection of fiction, poetry, essays, and other works about the Erie Canal written over the course of its history. 
• Rubin, Julius. Canal or Railroad? Imitation and Innovation in the Response to the Erie Canal in Philadelphia, Baltimore, and Boston. Philadelphia: American Philosophical Society, 1961. Discusses community responses to the completion of the Erie Canal. 
• Scheiber, Harry N. Ohio Canal Era: A Case Study of Government and the Economy, 1820-1861. Athens: Ohio University Press, 1969. Although this book deals with the problems of the Ohio canals, the situations were similar in the other midwestern states. 
• Shaw, Ronald E. Canals for a Nation: The Canal Era in the United States, 1790-1860. Lexington: University Press of Kentucky, 1990. An excellent history of the canal era; includes bibliography and index. 
• Sheriff, Carol. The Artificial River: The Erie Canal and the Paradox of Progress, 1817-1862. New York: Hill & Wang, 1996. Uses archival research to document the varied responses of ordinary people who lived along the waterway.

See also: bridges; Clay’s American System; highways; Mississippi and Missouri Rivers; First stagecoach line; Turnpikes; water resources.