Obsolescence
Even in the early 1830s, many new steamboats were too large to use the canal safely. The lower end of the canal received complaints because it opened into a narrow part of the river with a swift current. The obsolescence of the canal was shown as canal business failed to grow during the 1850s, despite booming growth in river traffic during that decade. The company plead for the federal government to finance improvements, but this was opposed by many, including Jefferson Davis, as a step that would further erode States' rights.
Although the government owned all meaningful stock in the company by 1855, it proved difficult for Congress to approve a bill formally taking control. Bills failed from 1854 to 1860 on the grounds of constitutionality, economy and efficiency. Senator Lazarus Powell of Kentucky said in 1860 "the only reason why the government of the United States has not long taken charge of the canal, is the fear that there would be demand on the national treasury to Enlarge it". Congress eventually passed on taking over the canal, but allowed the company to make major improvements at its own expense starting in 1860.
Read more about this topic: Louisville And Portland Canal