Formation
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.
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