The completion in 1825 of the 363-mile Erie Canal across upstate New York (a remarkable feat of engineering at a time when America’s next largest canal was only twenty-eight miles long) allowed goods to flow between the Great Lakes and New York City. Almost instantaneously, the canal attracted an influx of farmers migrating from New England, giving birth to cities like Buffalo, Rochester, and Syracuse along its path. Its water, wrote the novelist Nathaniel Hawthorne after a trip on the canal, served as a miraculous “fertilizer,” for “it causes towns with their masses of brick and stone, their churches and theaters, their business... to spring up.”
New York governor DeWitt Clinton, who oversaw the construction of the state-financed canal, predicted that it would make New York City “the granary of the world, the emporium of commerce, the seat of manufactures, the focus of great moneyed operations.” And, indeed, the canal gave New York City primacy over competing ports in access to trade with the Old Northwest. In its financing by the state government, the Erie Canal typified the developing transportation infrastructure. With the federal government generally under the control of political leaders hostile to federal funding for internal improvements, the burden fell on the states. Between 1787 and 1860, the federal government spent about $60 million building roads and canals and improving harbors; the states spent nearly ten times that sum.
The completion of the Erie Canal set off a scramble among other states to match New York’s success. Several borrowed so much money to finance elaborate programs of canal construction that they went bankrupt during the economic depression that began in 1837. By then, however, more than 3,000 miles of canals had been built, creating a network linking the Atlantic states with the Ohio and Mississippi Valleys and drastically reducing the cost of transportation.
A watercolor from 1830 depicts the Erie Canal five pears after it opened. Boats carrying passengers and goods traverse the waterway, along whose banks farms and villages have sprung up.
The improvement of existing roads and building of new roads and canals sharply reduced transportation times and costs and stimulated the growth of the market economy.