Louisville and Portland Canal

The modern canal after many enlargements

The Louisville and Portland Canal was a 2-mile (3.2 km) canal bypassing the Falls of the Ohio River near Louisville, Kentucky. The Falls form the only barrier to navigation between the origin of the Ohio at Pittsburgh and the port of New Orleans on the Gulf of Mexico; circumventing it was a priority for Pennsylvanian and Cincinnatian merchants from the founding of Louisville. It opened in 1830 as the private Louisville and Portland Canal Company but was gradually bought out during the 19th century by the federal government, which had invested heavily in its construction, maintenance, and improvement. The Louisville and Portland Canal became the McAlpine Locks and Dam in 1962 after extensive modernization.

The canal represented the first major improvement to be successfully completed on a major river of the United States.

Background

File:TownsitestheFalls.jpg

Townsites along the Falls of the Ohio.

See also: History of U.S. canals

The Falls of the Ohio are the only natural obstruction to riverine traffic from the source of the Ohio at Pittsburgh, Pennsylvania, to the Gulf of Mexico. Some of the earliest cities in Kentucky – Louisville, Portland, and Shippingport – developed from the need for portage of cargo around the rapids, except during a few weeks each spring when water on the river was very high. Although this source of income was popular with locals, merchants invested upriver – particularly those in Philadelphia and Cincinnati – disliked the expense and hassle. The situation caused wide fluctuations in prices up- and downstream, as there was always a glut of shipments during the few weeks of high water each year.

Thomas Hutchins’s 1778 map of the rapids

The first meeting of the trustees of the Town of Louisville on February 7, 1781, adopted a petition to the Virginia General Assembly for the right to construct a canal around the falls. Two years later, engineer and canal advocate Christopher Colles petitioned the Congress of the Confederation, promising to start a canal company in exchange for a grant comprising the necessary land. They declined.

Serious plans for a canal circulated throughout the early 1800s, with Cincinnatians in particular advocating a northern route through Indiana in order to blunt competition from Louisville. Canal companies were chartered by the state legislatures of both Kentucky and Indiana in 1805, but nothing came of either effort. In 1808, the Federalist Secretary of the Treasury Albert Gallatin suggested national funding for a Kentucky-side canal. The United States Senate passed bills to this effect in 1810 and 1811, but both died from Democratic opposition in the House. The Indiana Canal Company, that state's second effort, was chartered in 1818 and made preliminary excavations using private and state funds. The failure of a dam and the Panic of 1819 ended the attempt. Rumors that the Indianan dam had been sabotaged arose from the risk a canal posed to much of Louisville's economy, including not only forwarding, storage, drayage, and shipping but also provisioning, financing, hotels, and entertainment. Against this, however, some locals argued for the benefit a canal would provide to local manufacturing.

Canal Company

The route of the Louisville and Portland Canal in the 1850s.

Despite the completion of the federally-funded National Road in the 1810s and the state-funded Erie Canal in the 1820s (the latter of which cut transportation costs across New York by around 95%), continuing Democratic and Louisvillian opposition crippled attempts to fund a public canal in the Kentucky General Assembly. Instead, Charles Thurston of Louisville sponsored a bill to charter the private Louisville and Portland Canal Company. The charter established an initial toll of 20¢ per ton and permitted the company to operate the canal in perpetuity. The initial estimates in 1824 called for one year of construction at a cost of $300,000.

The company was chartered in 1825. Its initial members included James Guthrie, John J. Jacob, Nicholas Berthoud, John Colmesnil, James Hughes, Robert Breckinridge, Isaac Thom, Simeon Goodwin, Charles Thurston, Worden Pope, William Vernon, Samuel Churchill, James Brown, and James Overstreet. Guthrie was elected president.<ref=tri>Johnson, Leland & al.Triumph at the Falls: The Louisville and Portland Canal, pp. 30 ff. U.S. Army Corps of Engineers (Louisville), 2007.</ref> The company was authorized by its charter to sell up to 6000 shares of stock at a cost of $100 each, but the company required only $10 down and an additional $10 quarterly.<ref=tri/> In this way, $350,000 was raised from the initial sale of stock in March 1826, and $150,000 soon after. Much of this capital came from Philadelphia investors. This private, out-of-state ownership was praised at the time by Louisville's leading newspaper, the Public Advertiser, which said "no one is now apprehensive of any imprudent or unjust action on the part of the Legislature".

As it became evident that the canal would have to be dug through solid rock, the cost rose past $375,000 with two years of construction required. Some local investors, who were first to learn of the difficulties, defaulted on further payment towards their shares. In May 1826, the United States Congress voted to purchase 1,000 shares to shore up the company and make it a mixed corporation. Abraham Lincoln is said to have worked on the construction of the canal in 1827. The course was found to require adjustment and Congress invested an additional $133,500 in 1829.

The company was still due to run out of funds by the end of 1829, and a third influx of funds from Congress was vetoed by the newly-elected Pres. Andrew Jackson, who denounced the practice of giving federal funds to private corporations. This ended direct stock purchases towards the canal by the federal government. The company was forced to borrow $154,000 in 1830, and the partially-completed canal was opened in December of that year. The first steamboat to pass through was the Uncas. By this time, the stock was valued at over $1,000,000, of which the federal government held $290,000.

The canal's dimensions, 50 feet (15 m) wide, other than overall length, were huge in comparison with projects like the Erie Canal, in order to accommodate the growing boats that carried goods on the western rivers of the United States. Nevertheless, the canal became practically obsolete soon after opening as steamboat technology evolved. This, combined with rapid increase of tolls, decreased the economic impact of the canal. Although the canal decreased the freight rate along the river, it did not appear to significantly lower the prices of commodities, which fell at a faster rate in the 25 years before the canal opened than they did in the 25 years afterwards.

Government buyout

File:Picture 1661.jpg

1863 mansion with a direct view of the Portland Canal, of which the first owner was superintendent. It was later used at the corporate offices of the Ky. & Ind. Terminal Railroad Co.

Business was slow for the company until the canal was completed in 1833. The initial toll of 20 cents per ton proved insufficient, and the company had to increase it to 40 cents in 1834 and 60 cents in 1837. By 1834 the canal carried 1,585 boats and 170,000 tons. An economic boom in the late 1830s brought profits to the shareholders, as the canal moved over 300,000 tons of traffic at its peak in 1839. The tolls, and the obsoleteness of the canal, proved unpopular, and Congress began urging the government to buy out private shareholders and reduce the tolls. The government buyout, although at times passed by the Senate, met with heavy opposition, especially from Indiana representatives, which was still attempting to build its own canal as late as 1842. Other opponents believed the move would be a violation of states' rights.

To solve the problem, the company's stockholders chose to buy themselves out—with the Congress's money. In lieu of receiving dividends, investors elected to use company profits to redeem their private shares at a substantial premium, until the government owned all remaining shares. The private shareholders would make a tidy profit, and the government would wind up owning the canal. Stockholders approved this policy in 1842 and the government took no part in the decision. The canal remained heavily profitable as the buyout continued, despite an economic depression, allowing the toll to be decreased to 50 cents per ton from 1842 to 1855, when the buyout plan was completed. The deal proved to be a windfall to investors.

Obsolescence

Even in the early 1830s, many new steamboats were too large to use the canal safely. The lower end of the canal received complaints because it opened into a narrow part of the river with a swift current. The obsolescence of the canal was shown as canal business failed to grow during the 1850s, despite booming growth in river traffic during that decade. The company plead for the federal government to finance improvements, but this was opposed by many, including Jefferson Davis, as a step that would further erode States' rights.

Although the government owned all meaningful stock in the company by 1855, it proved difficult for Congress to approve a bill formally taking control. Bills failed from 1854 to 1860 on the grounds of constitutionality, economy and efficiency. Senator Lazarus Powell of Kentucky said in 1860 "the only reason why the government of the United States has not long taken charge of the canal, is the fear that there would be demand on the national treasury to Enlarge it". Congress eventually passed on taking over the canal, but allowed the company to make major improvements at its own expense starting in 1860.

Economic impact

Despite complaints from shippers about the high toll and insufficient capacity of the canal, it had a profound impact on the local economy—initially seen as a negative one—due to the loss of traditional portage business from passing boats. An introductory remark in the Louisville Directory of 1844 explained public sentiment towards the canal: "The Louisville and Portland Canal, as constructed and maintained, is precisely one of those improvements for private interests, at the expense of the public good, which is obnoxious to the good of the whole community". Portland and Shippingport, which once rivaled Louisville in economic strength, could not keep pace with it and eventually were annexed by Louisville. Portland became a neighborhood in West Louisville, and Shippingport, made into an island by the canal, would decline slowly for a century before the government bought out the remaining families in 1958.

During the American Civil War, Confederate forces had intended to capture the canal in order to hamper the Union war effort. One officer in the Confederacy suggested destroying it so "future travelers would hardly know where it was".

Improvements

Congress ignored the canal from 1860 to 1867, freeing up the directors to improve it. A $865,000 plan for improvements began, but work was slowed drastically by the American Civil War, and the company was $1.6 million in debt by 1866. In 1867, Congress, now largely free of opposition to the plan, allowed the Army Corps of Engineers to take over improvements to the canal. The two new locks, each 390 feet (120 m) long and 90 feet (27 m) wide, opened in February 1872. By 1877 canal traffic had tripled from any previous level.

However, by the 1870s, more goods were being shipped by railroad and the river was no longer the primary means of transportation, an economic change to which the failures to improve the canal contributed. The river had become most useful for transporting heavy, low-value industrial supplies such as coal, salt and iron ore. In May 1874 Congress passed a bill allowing the Army Corps of Engineers to take over the canal, and authorizing the treasury to pay off the bonds remaining from the recent improvements, and the Louisville and Portland Canal Company faded out of existence. In 1880 Congress made the canal free of toll, and began paying its expenses from the treasury.

A new lock was built in 1921 as a part of Congress's plan for the "canalization" of the Ohio River. As a part of radical enlargements in 1962 to build a new dam and expand the width to 500 feet (150 m), the canal became known the McAlpine Locks and Dam.

The east entrance to the Portland Canal.

See also

• Indiana Canal Company
• McAlpine Locks and Dam