Over the next decade, Hoosier politicians mapped out a thousand miles of canal routes, locks and reservoirs. In January 1836, Gov. Noah Noble signed the Mammoth Internal Improvement Act to fund them along with turnpikes and railroad lines.
The law provided for eight major public works projects including extension of the Wabash-Erie Canal to Terre Haute; the Whitewater Canal in southeastern Indiana to link the National Road with the Ohio River; and the Central Canal to stretch from Peru through Indianapolis to Evansville. It established a board of commissioners to borrow $10 million over 25 years to finance the projects, to be paid back out of rents, tolls and profits on the routes once they were up and running.
It didn't happen. A serious depression hit the country in 1839, and work stopped on most of the projects. By 1841, Indiana was in financial crisis and could not pay interest on the debt.
Creditors cried foul and in the end got back only half the amount due them plus stock in the one canal system with potential to be profitable: the Wabash and Erie, which was already in service. Its route was reworked to reach Evansville in order to complete the Lake Erie-Ohio River connection.
When completed in 1853, the Wabash-Erie Canal stretched 468 miles and surpassed the Erie Canal in length. For a time it did a booming traffic in people, lumber, livestock and grain, but by the end of the Civil War it was in disrepair and its business supplanted by the railroads, which were faster and more efficient.
It was abandoned in 1874. “It was a very significant canal, but because it was built a little bit later than some of the eastern canals it was not nearly as successful economically,” says Dan McCain, president of the Wabash and Erie Canal Association.
The association has preserved a three-mile stretch of the canal at Delphi where it offers boat rides and runs a museum with an extensive exhibit documenting the history of Indiana's canal era and financial collapse.
Whitewater Canal also became fully operational from Hagerstown to Lawrenceburg and Cincinnati, about 76 miles total, but was plagued by frequent flooding and abandoned in 1864.
A section of the canal is preserved as a state historic site in Metamora, where visitors can ride a horse-drawn canal boat and visit the nation's only surviving covered bridge aqueduct.
Only eight miles of the planned 296-mile Central Canal were completed and operational, a portion of which is used today as an Indianapolis water source. Starting in the Broad Ripple neighborhood, visitors can walk along the crushed stone towpath, which looks much as it would have in the 19th century.
The canal era was short-lived but has been described by one historian as an important stage in our agricultural expansion and “economic diversification toward manufacturing and commerce.”
It had one other enduring impact: As a result of the experience, when lawmakers rewrote the state constitution in 1851 it contained a provision prohibiting the state from going into debt.