Louisville and Portland Canal
Coordinates: The Louisville and Portland Canal was a 2-mile (3.2 km) canal bypassing the Falls of the Ohio in the Ohio River near Louisville, Kentucky. It opened in 1830, and was operated by the Louisville and Portland Canal Company until 1874, and became the McAlpine Locks and Dam in 1962 after extensive modernization.
Although initially a private company, construction of the canal required heavy investment from the federal government, which gradually came to own the canal through an unusual buyout plan. The canal represented the first major improvement to be successfully completed on a major river of the United States.
The Falls of the Ohio are the only natural obstruction in the Ohio River. Both Louisville and other early towns later absorbed by Louisville, Portland and Shippingport, were founded before a canal was available. These towns based much of their early growth on portage from ships traveling down the river, which were unable to navigate the falls fully loaded except for a few weeks in spring when water was very high. Although this source of income was popular with locals, shippers and boatmen disliked the expense and hassle. The situation caused wide fluctuations in price for farmers upstream and merchants in the river's eventual destination, New Orleans, as there was a glut of shipments during the few weeks of high water each year.
Engineer and canal advocate Christopher Colles petitioned the Congress of the Confederation in 1783 for a land grant at the falls, with a promise to start a canal company. They declined. As early as 1805 there were serious plans for a canal to bypass the falls, with rival sides supporting a canal either on the Kentucky (south) or Indiana (north) side of the river. Proponents of an Indiana-side canal included Cincinnati businessmen, who feared economic competition from Louisville. Both Kentucky and Indiana chartered canal companies in 1805, although nothing came of either effort. Indiana chartered a second company in 1818, which made preliminary excavations, work was halted after the possible sabotage of a dam, and all efforts were halted by the Panic of 1819.
In 1808 Secretary of the Treasury Albert Gallatin suggested federal backing of a Kentucky-side canal. The United States Senate passed bills to this effect in 1810 and 1811, but both died in the House. Although little materialized politically, the subject of the canal and federal funding for it was widely debated in Kentucky, Indiana, Ohio, and Washington, D.C. in the 1820s.
The Louisville and Portland Canal Company was chartered as a private company in 1825 by the Kentucky Legislature, after it had proven impossible for the body to approve a state-funded project. The bill was introduced by Charles Mynn Thruston of Louisville. The charter established an initial toll of 20 cents per ton. There no limits on the amount of time the company would be allowed to operate the canal. $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".
In 1824, it was estimated that the canal could be completed in a year for $300,000. As it became evident the canal would have to be dug through solid rock, the cost rose past $375,000 with two years of construction required, and some local investors, who were first to learn of the difficulties, defaulted on their investments. In May 1826 the United States Congress voted to invest about $100,000 to shore up the company and make it a mixed corporation, but financial difficulties continued as the course of the canal had to be changed, 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 Andrew Jackson, who denounced the practice of giving federal funds to private corporations which would be able to profit from the infrastructure the government partially financed. This ended federal stock purchases related to the canal. Thus, 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.
An interesting anecdote is that Abraham Lincoln is said to have worked on the construction of the canal in 1827.
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 
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.
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".
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.
- Trescott, Paul B. (March 1958). "The Louisville and Portland Canal Company, 1825-1874". The Mississippi Valley Historical Review (Organization of American Historians) 44 (4): 686–708. doi:10.2307/1886603. JSTOR 1886603.
- Trescott, 694
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- text of the petition read in Congress July, 4, 1783 is in Hulbert, Archer Butler, ed. (1918). "XVIII Colles’ Petition to Improve Ohio River Navigation (1783)". Ohio in the Time of the Confederation. Marietta College Historical Collections 3. Marietta, Ohio: Marietta Historical Commission. pp. 92–94.
- Trescott, 687
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- Trescott, 690-692
- Trescott, 692-693
- The real Lincoln: a portrait - Google Books. Books.google.com. 2008-10-01. Retrieved 2010-07-30.
- "History of the Kentucky & Indiana Terminal Railroad". Retrieved 2007-05-24.
- Trescott, 695-696
- Trescott, 697-698
- Trescott, 688-699
- Trescott, 700-701
- Burnett, Robert A. (April 1976). "Louisville's French Past". Filson Club Quarterly: 9–18.
- Civil War Engineering and Navigation www.usace.army.mil/usace-docs/misc/un22/c-7.pdf
- Trescott, 702-706
- Trescott, 706-707
- The Falls City Engineers: A History of the Louisville District. Army Corps of Engineers. 1975.