The Canal Era:
The Economic Middle Ground Ascendant

Shortly after the end of the War of 1812, it became clear that New York State would finance a canal to connect the Great Lakes with the eastern seaboard.  Such a project would instantly transform a situation of hardship and necessity into one of enormous potential ­ another recipe for conflict.  Indeed, the famous competition between Black Rock and Buffalo over who would receive the terminus of the Erie Canal reveals just such dynamics.  But this competition was not destructive.  Instead, it spurred Buffalonians to come together in a broadly-based community effort to dredge Buffalo Creek and create a harbor so that the city would be more attractive to the Canal designers.  And across the border in Canada, canal-borne dreams of plenty produced more anticipation of increased prosperity than jealousy.  Just as the American side of the river, and Buffalo in particular, grew astronomically in economic activity and importance after the 1825 opening of the Erie Canal, so did the Canadian side.  Evidence suggests that many Canadians, especially businessmen, were perfectly aware of the source of their windfall.  The “borderland economy” that had sustained them through the pioneer days would now, all hoped, make them rich.

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That they expected to benefit from the Erie Canal did not detract from a healthy competitive spirit among Canadians.  Determined not to allow the Niagara peninsula to become a mere adjunct to a successful Erie Canal corridor, William Hamilton Merritt of St. Catharines shepharded the construction of the second great waterway construction of this era, the Welland Canal, which connected Lakes Erie and Ontario to the west of the Niagara River.  The Canadian canal builders, who completed their project in the winter of 1829, relied heavily on Americans for inspiration, know-how, and ultimately for capital.  They also envisioned, correctly, that the Welland would boost the already thriving north-south trade with the United States.  Americans agreed, applauding any development that would increase trade and trading opportunities in the region.  Indeed, US investment along the Welland Canal in the decades to come would be so heavy that some observers later described it as “an American industrial outpost in Canada.”  These American regional boosters, like their Canadian counterparts, recognized that trade was not a zero-sum game.  Instead of focusing on the potential competition the Welland opened up between the Lake Ontario-St. Lawrence channel and the Erie Canal, they chose to view the new waterway as expanding the regional economy.  Even though the Welland had been spurred by competition across the border, it’s builders were ultimately thinking about addition, not subtraction:  linking up with the northern edge of Lake Erie and other points west and south would ultimately benefit the region as a whole.

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