Indiana Canal Company
| Company type | Private company |
|---|---|
| Industry | Transportation, Infrastructure (Canals) |
| Founded | 1805 |
| Founder | Aaron Burr, Davis Floyd, George Rogers Clark (board members) |
| Fate | Disbanded before construction commenced |
| Headquarters | Clarksville , United States |
| Products | Canal construction and operation (planned) |
The Indiana Canal Company was founded in 1805 with the goal of building a canal circumventing the Falls of the Ohio on the Indiana side of the Ohio River. Despite multiple efforts and possible interference linked to the competing Louisville and Portland Canal, the initiative was eventually discontinued.
History
As settlers moved into the Midwest, they transported agricultural goods down the Ohio River toward the Mississippi River and New Orleans. The principal challenge was navigating the Falls of the Ohio rapids located between Clarksville, Indiana, and Louisville, Kentucky, where cargo had to be unloaded, carried overland for , then loaded again. This process caused delays and substantial expenses, with transport costs alone exceeding $50,000 annually for Cincinnati goods.
Since 1790, proposals had been made to build a canal bypassing the falls to facilitate smoother shipping. Both Indiana and Kentucky vied to be first in constructing it, expecting considerable economic gains. Early advocates such as Josiah Stephens and Benjamin Hovey anticipated rapid wealth accumulation for Indiana.
First company
Indiana took the lead by officially chartering the Indiana Canal Company on August 24, 1805. The favorable charter allowed tolls ranging from two to five dollars. The board featured prominent figures including Aaron Burr, Davis Floyd, and George Rogers Clark. The Indiana Territory invested $120,000 as initial capital, while private investors pledged over $1.2 million.
The company planned a route through a downhill ravine near Cane Run creek, intending to dam this creek to form a natural canal linked by a lock to the Ohio River. This approach was considered more economical than alternatives proposed on Kentucky’s side.
Nevertheless, the company disbanded before construction commenced following revelations of the Burr conspiracy. Floyd was briefly imprisoned; Burr faced treason accusations but was released due to lack of evidence. Allegations that company funds supported Burr’s plot were never substantiated, and no further inquiry occurred.
Second and third company
In 1817, Indiana created a second canal enterprise, named the Ohio Canal Company, championed by Governor Jonathan Jennings to stimulate state economic growth. This company received $1 million in initial funding, expanded board membership to reduce corruption risks, tax exemptions, and eminent domain authority. Despite these advantages, it failed to attract adequate investment. The following year saw formation of the Jeffersonville Ohio Canal Company, granted additional powers to set tolls and raise $100,000 through a lottery.
Construction began in 1819 with damming of Cane Run as originally planned. The canal was designed to extend long with widths varying from at its top to at its base. Work stopped after a dam collapse—believed either due to sabotage by Louisville rivals or damage caused by muskrats—exacerbated by financial difficulties stemming from the Panic of 1819. Unable to secure further capital, the company ceased operations.
Aftermath
Without resources to continue construction, progress halted indefinitely. In 1824, the Indiana General Assembly appointed a commission including Christopher Harrison to explore resuming work on the canal; however, no further steps were taken. The debate concluded in 1825 when the federally funded Louisville and Portland Canal was completed in 1831, immediately turning profitable and remaining in use well into the modern era.
A detailed War Department report on constructing a ship canal around the Falls of the Ohio was submitted to Congress in 1869 following studies conducted during 1867–68 but never acted upon.
The canal’s failure dealt a major blow to Clarksville’s ambitions of becoming a key commercial center. State initiatives such as prison labor programs and infrastructure projects were disrupted, leading to Clarksville’s decline while Jeffersonville experienced growth. Motivated by Louisville’s success, Indiana redirected efforts toward northern waterways like the Wabash and Erie Canal to foster regional economic development.