In the late 18th and early 19th centuries, the construction of canals was being considered to improve inland transportation in North America, which was limited to trails and coastal navigation. The setting of such canals faced strong constraints as no navigable river system from the East Coast was reaching far inland, except for the St. Lawrence that was navigable up to Montreal. The Appalachian Mountains limited the inland reach to just a few hundred miles, with navigation often blocked by rapids or waterfalls (the Fall Line). The Great Lakes offered significant agricultural potential, but their access was blocked by the Lachine Rapids and the Niagara Escarpment. Segments between navigable waterways involved a costly portage where freight was carried by horses.
Canal construction performed by private companies was closely following the course of rivers with some river segments being essentially canalized (replaced by the canal). Rivers provided water supply to be used in locks as well as a path of minimal friction. The issue was that canals never followed a direct path. The exception was when a “cut” was needed, which was done with the straightest path possible but at great expense. As the first major canals were being constructed in the 1820s and 1830s, they provided significant economies of scale for North American inland transportation. While a horse could carry one-eighth of a ton, a canal barge could carry 30 tons. Two canal systems emerged, one east of the Appalachians along the East Coast and one west of the Appalachians in the Midwest:
- The first canal system was an attempt to connect the interior from a set of coastal cities and go as far inland as technically possible. It took place from two main corridors. The first went from Montreal and along the St. Lawrence to Lake Erie with the completion of the Lachine Canal in 1825 and the Welland Canal in 1829, which overcame the Niagara Escarpment between Lake Ontario and Lake Erie. The second was the Erie Canal system, completed in 1825 and connecting Albany, Syracuse, and Buffalo. A connection to Lake Ontario was provided to the Oswego branch completed in 1828. Many other branch canals were built to carry coal from the Appalachian to the cities of the East Coast.
- The second canal system in the Midwest was mostly connecting the Ohio River to Lake Erie, enabling to access the agricultural resources of the region and to carry them back to the East Coast through the Erie Canal. The two most important canals were the Ohio & Erie Canal completed in 1833 linking Cleveland, Columbus, and the Ohio River, and the Wabash & Erie Canal completed in 1853 linking Toledo to Evansville. A canal completed in 1848 between Chicago and the Illinois River was an important factor in the subsequent role of the city as the most important transportation hub in North America.
The first canals were constrained by several technical limitations related to their draft (4 to 10 feet) and the lift that locks could provide. Early locks could elevate a barge by only 8 to 10 feet, implying that a climb of 100 feet required 10 to 15 locks. For instance, the Chesapeake & Ohio Canal that linked Washington DC to Cumberland, Maryland climbed 605 feet and required 74 locks (average of 8.2 feet per lock). By the late 19th century, improvement in lock technology permitted a single lift of 30 to 40 feet. For instance, a lock system at the town of Lockport climbing the Niagara Escarpment along the Erie Canal was modernized into one lock offering a lift of 40 feet instead of five locks lifting 8 feet each. The first barges were propelled manually by pushing a pike and using a rudder (mostly downstream) or hauled by horses along the towpath (mostly upstream). Later, barges were motorized but tended to be larger and used for canals having deeper drafts.
Paradoxically, the setting of canals also induced the construction of the first rail lines to compete with an existing transport market or for portage between unserviced segments. For instance, one of the first rail lines to be established in the United States in 1834, the Philadelphia and Columbia Railroad, was built to complement the Schuylkill and Union canals between Harrisburg and Philadelphia. Another important rail line completed the same year was the Allegheny Portage Railroad, which was the first railroad constructed through the Allegheny Mountains (part of the Appalachian Range), linking two canal cities; Johnstown (east of Pittsburgh) and Hollidaysburg (west of Harrisburg). The first railroad in Canada, the Champlain & St. Lawrence Railroad, completed in 1838 between La Prairie and St. Jean-sur-Richelieu, was also built with the same rationale; a portage between the St. Lawrence and Lake Champlain.
By the late 19th century, most of the canals were abandoned as they lost their commercial utility. Many had limited draft, high upkeep and were no longer able to compete effectively with railways. Those left today, such as the Erie Canal, the Rideau Canal, and the Champlain Canal, are used for recreational purposes and managed by state or federal governments as parks. Portions of some canals have been restored, again for recreational purposes. The only commercial exceptions are the Welland Canal, upgraded several times, which is now part of the St. Lawrence Seaway that was completed in 1959, and the Illinois and Michigan Canal that links Chicago to the Illinois River and which has been supplemented by the Chicago Sanitary and Ship Canal in 1900.