The Erie Canal and the Rise of the Market Economy

by Roberta McCutcheon


  • Students will examine primary documents and secondary sources to analyze effects of technology on economic growth in the first half of the nineteenth century. 
  • Students will be able to identify the major economic trends of the first half of the nineteenth century.
  • Students will be able to identify how technological advances in transportation in the first half of the nineteenth century changed the economy of the U.S. and the government relationship to that economy.
  • Students will be engaged in historical research and critical analysis.


In 1776, we declared our intention to separate from Great Britain. This set in motion a war that made the declaration a reality.  While the American Revolution ended our troubled colonial relationship with England, it did not end all of the problems of the young nation.  It unleashed a series of new challenges, not the least of which were a severe economic depression and the need to gain access to the western land.  While Alexander Hamilton and Thomas Jefferson formulated competing visions for the nation’s future economy, a number of other major players on the political scene considered the successful bridging of the Appalachian Mountain range essential to our future as “united” states.  Among the latter were George Washington, Benjamin Franklin and DeWitt Clinton.  They all considered the canal as the best means to connect eastern waterways with western waterways to end the isolation of the frontier.  De Witt Clinton focused on a canal between the Hudson River and Lake Erie.   
Though there was a presumption on the part of canal enthusiasts that the government (in this case state government) would have a significant role in canal construction, there were also legislators who opposed the idea.  It took until 1816 for DeWitt Clinton to convince the New York legislature of the wisdom of his “ditch. ”  By 1825 his grand project was complete—almost 400 miles of canal stretching from the Hudson River to Lake Erie.  Although the construction of the canal was an engineering feat of monumental proportions, the lasting significance was its connection of mouth of the Hudson River to the interior of the nation which brought historic change in the nation’s economy.  This lesson will enable students to explore those changes.

Student Activity One: Create the Historical Setting

It is important to understand the historic context in which the construction of the Erie Canal took place.  Divide the class into three groups. Assign each group one of the following topics:  

  1. The economy of the U.S. in after the American Revolution
  2. Foreign relations in the three decades following the American Revolution
  3. Westward expansion in the early nineteenth century
  4. Regional development and the national economy

Have each group share its research on the assigned topic with the class.

The following site is a good starting point for the students to continue their reseach:

Student Activity Two: Debate

Have the class research primary and secondary sources regarding the disparate views of Alexander Hamilton and Thomas Jefferson regarding the future economy of the United States.  

Using the research, set up a debate using the following resolution:

Resolved: Thomas Jefferson’s vision for the future economy was better for most people in the United States than the vision of Alexander Hamilton. 
The format for the debate will depend on the size of the class.

The following sites will be helpful (this is not a complete list):

Student Activity Three:  Panel Discussion on the Erie Canal and the Rise of a Market Economy

Select five panelists to present essential information about the canal and the changes it set in motion.  Select a student moderator as well.
The panelists will: 

  • Prepare an opening speech on one of the following as
    • The construction of the canal
    • The growth of Buffalo, NY
    • The growth of Rochester, NY
    • The growth of NYC
    •  Relevance of the canal to the national economy
  • Respond to questions about the canal, the development of related cities and the canal’s role in the growth of the national economy and the Market Revolution

The moderator will:

  1. Introduce the issue for the panel discussion.
  2. Prepare questions for panelists.
  3. Direct questions from the audience (all non-panelist members of the class) to the panelists.

The following sites will be helpful (this is not a complete list): 

Extension Activity:  Essay

In what ways and to what extent did the Canal Era change the economy of the New Republic?

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