Economist Paul Krugman probably didn’t have the Erie Canal in mind today when he wrote about the rise of renewable energy, but he could have. The themes are similar.
In his newsletter, Krugman noted that renewables have grown explosively in the past decade, spurred by what he calls a virtuous circle of falling costs and increasing production. That circle is the result of subsidies that made renewable energy a going concern in the face of fossil fuels. Today, he points out, reports like that of Vice President Dick Cheney’s 2001 energy policy task force warning that renewable energy would play a trivial role in the nation’s energy future would be funny if the Trump administration weren’t echoing them.
In fact, as Krugman notes, solar and wind are unstoppable. They produced 15% of the world’s electricity in 2024 and account for 63% of the growth in electricity production since 2019. Green energy will continue to grow even if U.S. policy tries to wrench us back to burning coal, “with important geopolitical implications,” Krugman writes. “China is racing ahead.”
Krugman notes that it was originally Alexander Hamilton who called for government investment in new technologies to enable the economy of the infant United States of America to grow and compete with other nations. But Hamilton was not the only one thinking along those lines.
In the early years of the American republic, trade was carried on largely by water, which was much easier to navigate than the nation’s few rough roads. In 1783, even before the end of the Revolutionary War, George Washington was contemplating how to open “the vast inland navigation of these United States” to trade. In 1785, after the war had ended, Washington became the head of a company created to develop a canal along the Potomac River that would link the eastern seaboard with the Ohio Valley, bypassing the waterfalls and currents that made navigation treacherous. But under the Articles of Confederation then in place, the country’s states were sovereign, and there was no system for managing the waterways that traversed them.
In 1785, representatives from Maryland and Virginia agreed on a plan for navigation on the Potomac and other local waterways, as well as for commerce regulations and debt collection. Virginia delegates then invited representatives from all the states to another meeting on commercial issues to take place in Annapolis, Maryland, on September 11, 1786. That second meeting called for a constitutional convention to discuss possible improvements to the Articles of Confederation.
Delegates met in Philadelphia, Pennsylvania, in the summer of 1787. They produced the United States Constitution.
With a new, stronger government in place, lawmakers and business leaders turned back to the idea of investing in infrastructure to facilitate economic development. Lawmakers in New York worried that settlers in the western part of the state would move their produce north to Lake Ontario and the St. Lawrence River into Canada, breaking the region off from the United States. The vast lands around the Great Lakes would naturally follow.
New York legislators asked Congress to appropriate money to build a canal across the state from the Hudson River to Lake Erie (avoiding Lake Ontario to keep traders away from Montreal). But while Congress did pass creating a fund to construct roads and canals across the nation, President James Madison vetoed it, despite his previous support for internal improvements. His opposition helped to spur support within New York for the state to fund the project on its own.
And so in 1817, after legislators under Governor De Witt Clinton funded the project, workers broke ground on what would become the Erie Canal.
To build the canal, untrained engineers figured out how to cut through forest, swamps, and wilderness to carve a 363-mile path through the heart of New York state. Workers dug a 40-foot-wide, 4-foot-deep canal and built 83 locks to move barges and vessels through a rise of 568 feet from the Hudson River to Lake Erie. The project became the nation’s first engineering school, and those trained in it went on to other development projects.
Detractors warned that in Clinton’s “big ditch would be buried the treasure of the State, to be watered by the tears of posterity.” But after it was completed in 1825, the project paid for itself within a few years. Before the canal, shipping a ton of goods from Buffalo to New York City cost more than 19 cents a mile; once a trader could send goods by the canal, the price dropped to less than 3 cents a mile. By 1860 the cost had dropped to less than a penny.
The canal speeded up human travel, too: what had been a two-week trip from Albany to Buffalo in a crowded stagecoach became a five-day boat journey in relative comfort. As trade and travel increased, new towns sprang up along the canal: Syracuse, Rochester, Lockport.
The Erie Canal cemented the ties of the Great Lakes region to the United States. As goods moved east toward New York City and the Atlantic Ocean, people moved west along the canal and then across the Great Lakes. They spread the customs of New England and New York into Ohio, Indiana, Illinois, Michigan, Wisconsin, Iowa, and Minnesota, bringing explosive growth that would, by the 1850s, clash with southerners moving north.
But in fall 1825, that cataclysm was a generation away, and New Yorkers marked the completion of the canal with celebrations, cannon fire, and a ceremony with Governor Clinton pouring a keg of water from Lake Erie into the Atlantic.
The festivities began on October 26, 1825, exactly 200 years before economist Krugman wrote about the importance of government support for renewable energy, demonstrating that the more things change, the more they stay the same.
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Notes:
https://npshistory.com/publications/grfa/brochures/patowmack-canal-3.pdf
Noble E. Whitford, History of the Canal System of the State of New York Together with Brief Histories of the Canals of the United States and Canada, volume 1 (1906), pp. 9, 22, 127, at https://babel.hathitrust.org/cgi/pt?id=mdp.39015006087442&seq=7.
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