ISSN 2330-717X

The Canal System And The Development Of Early American Economy – Analysis


By He Jun


The prosperity and development of the United States that it enjoys today did not come out of thin air. This is especially true in its early days of economic development which has a lot to do with the construction of the transportation system. In the beginning, it was the development of water transportation, then the railway, next followed by the highways. The construction of these major transportation systems supported the early development, prosperity, and rise of the U.S., laying the foundation for it to become a major world power.

The early water transport in the U.S. is rather interesting, and it mainly aimed to connect more places in the country by excavating and expanding the canal system. According to incomplete statistics, the total length of canals in the U.S. is 18,000 km. This 18,000 km long canal was of great significance to the early economic development of the country. This well-connected water transportation system has greatly enriched the exchange of commodities, promoted trade, and enabled the convenient transportation of raw materials, salt, whisky, energy coal, and many other products within the country. The domestic market of the U.S. had also expanded, and its national economy transformed from weak to strong.

The longest and the most well-known canal in the U.S. is the Erie Canal. The Erie Canal is named after the lake and starts from the Niagara River which originates from Lake Erie. It spans upstate New York and joins the Hudson River in Albany, the capital city of New York State, with a total length of 574 km. It is not only the longest canal in the U.S. but also the sixth-longest in the world. Back in the early 19th century, before the automobile existed, there was an urgent need for a transportation route from the Atlantic coast to the Appalachian region. A canal was proposed to run from Buffalo on the east shore of Lake Erie through the canyons of the Mohawk Valley to Albany on the upper Hudson River.

In 1817, the New York State Legislature approved the construction of the Erie Canal. After much arduous work, the canal was finally opened on October 25, 1825. Its total length is 584 km (363 miles), The channel was cut 12 m (40 feet) wide and 1.2 m (4 feet) deep. In order to solve the problem of water level drop, a total of 83 locks have been built in the canal, each lock is 27 m by 4.5 m, allowing the navigation of flat-bottomed barges with a maximum displacement of 75 tons (68 tonnes).

The Erie Canal was the first express transportation to provide the east coast and west interior of the U.S. much faster than the animal-pulled carts most commonly used at the time. Not only did it speed up transportation, but it also cut transportation costs along the coast and inland by 95%. Fast canal traffic made western New York more accessible, resulting in rapid population growth in the Midwest. The canal had as much impact on the development of the upper Midwest as it did on the development of New York City. Many pioneers flocked west through the canal, into Michigan, Ohio, and Illinois, Indiana, from where they shipped agricultural products through the canal to be marketed in New York, and the return journey was loaded with industrial goods and supplies to the west. Manufacturing industries emerged on both sides of the canal, supplying a steady stream of products to New York City. From Buffalo to New York, land freight once reached $100 per ton, and it was only $10 by the canal. In nine years, tolls had paid back the cost of the construction of the canal. By the time the toll was abolished in 1882, the revenue from the canal had been used to pay for the construction of several canal spurs, and there was substantial tax payment as well.


The canal has been expanded several times. After its reconstruction in 1909, it has become 544 km long, 45 m wide, and 3.6 m deep. By the 20th century, New York had developed a network of canals connecting Lakes Champlain, Ontario, and Finger, and the Erie Canal remained the central route, capable of navigating barges with a capacity of 2,200 tons. The establishment of the Erie Canal connected the water transport of the Great Lakes with New York Harbor and became the main waterway of the navigable canal system in New York State. The freight from Lake Erie to New York only required the cost of one-tenth of the former, making the city, much smaller than Philadelphia and Boston at that time, rapidly developed into the largest port and city in the country. The construction of the Erie Canal played a major role in promoting the economic development of the eastern United States and New York. The population of New York in 1820 was 123,700, and the population of Philadelphia was 112,000. By 1860, the numbers rose to 1.08 million and 566,000 respectively. Consequently, New York thrived as a port city. In 1800, only about 9% of all foreign goods in the United States entered the United States through New York Harbor, yet by 1860, that percentage jumped to 62%. The strengthening of New York’s status too indirectly led to the gradual establishment of Wall Street’s status. In this regard, the Erie Canal contributed greatly to such progress.

In addition to changing urban patterns and the rise of industry, the Erie Canal had a far-reaching impact on the U.S. economy, gradually transforming it into a consumer-led economy that determined the subsequent U.S. economic landscape. Culturally, the opening of the Erie Canal also boosted the Protestant revival movement known as the Second Awakening. Western New York was one of the main areas of this movement, and a crucial reason for this was the opening of the Erie Canal. In the small towns emerging on both sides of the canal, various sects began to proselyte in places where their churches had yet to be common, and some emerging religious groups took root there and rapidly developed, including the Church of Jesus Christ of Latter-day Saints, commonly known as the Mormons.

Other than the evangelization along the Erie Canal, many new trends of thought also made their appearance there, such as the early feminist movement, the abolition movement, and utopianism, which all found their initial supporters in the emerging towns in that region. Hence, the construction of the Erie Canal played a driving role in the changes of the American cultural pattern.

From the day the Erie Canal was built, the vast area between the Appalachian Mountains and the Mississippi River, especially the Midwest around the Great Lakes, was no longer the frontier of the United States, but was connected to the east coast and became the heartland of the country. The economic and social changes it brought about had put the U.S. on the first step toward becoming a great power. The central and western regions could industrialize swiftly, forming the Great Lakes industrial areas, mining areas, and urban belt. All of these were inseparable from the Erie Canal, therefore it is not unreasonable for many to consider the opening of the Erie Canal as the official beginning of the first industrial revolution in the U.S.

There are numerous canals within the U.S. According to incomplete statistics, the country has built a total of 18,000 km of canals. The entire country has also become an organic whole because of these canals, which not only effectively enhanced the ability to resist droughts and floods, but also greatly developed the American economy and market.

Final analysis conclusion:

The construction of the canal system played an important role in the early transportation improvement, trade flow, market expansion, cultural dissemination, and urban development of the United States. This, in turn, has greatly promoted the development of the American economy and played an important role for it to become a major power.


Anbound Consulting (Anbound) is an independent Think Tank with the headquarter based in Beijing. Established in 1993, Anbound specializes in public policy research, and enjoys a professional reputation in the areas of strategic forecasting, policy solutions and risk analysis. Anbound's research findings are widely recognized and create a deep interest within public media, academics and experts who are also providing consulting service to the State Council of China.

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