Canal Boom

About Canal Boom

A speculative frenzy in American canal companies in the 1820s. The success of the Erie Canal, completed in 1825, triggered massive investment in canal projects across the Northeast and Midwest. Many canals were built with state backing and private capital. Competition between canal routes drove wasteful duplication. The railroad eventually made most canals obsolete. Investors lost millions as canal companies went bankrupt. However, the canal boom created valuable infrastructure that facilitated westward expansion and industrial development. The Erie Canal alone reduced shipping costs from Buffalo to New York by 95 percent.