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Chapter 2: Construction and Finance, 1825-1833
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"+) H ) ) ) ) ) >>rr,.) )))))> CHAPTER 2 Construction and Finance 1825-1833 ENACTMENT of the February J 825 canal law was a political triumph, but formidable obstacles to the project's success lay ahead, Chief among these was the urgent problem of financ· lng, The canal commission had received assurances and encour· agement from eastern [lIIaneiers, and of course New York State had proved that an American slale government could harrow capital for canal purposes in hath domestic and foreign money markets, But Ohio in 1825 had less than half the population of New York in 1815, when the first of the Erie Canal bonds had been sold, and Ohio's public revenues were considerably smaller,1 Even if funds could be obtained, moreover, considerable doubt remained as to whether Ohio could command engineering and managerial talent sufficient to design and build the canals suc· cessfully. Opponents of the r825 canal plan still insisted that the surveys had been deficient and water supplies overestimated. If such charges were accurate, or if the electorate lost enthusiasm for the project as the effects of increased state indebtedness and taxation were felt, the legislature might well order retrenchment, curtailing construction on one or both projected cana[s,2 Indeed, until construction was actually completed eight years [ater, the canal commissioners would be haunted by the specter of millions borrowed to finance nearly four hundred miles of ditches which might be unable to sustain navigation, or might need to be aban· doned when only half completed. Construction and FirWf!('(: ( 37 The legislature had taken two steps, however, that greatly enhanced the prospects of successful financing. First, it appointed men of high standing and ability (0 the three-man board of fund commissioners given responsibility for obtaining loans and managing canal funds. They were Ethan Allen Brown, now a United States Senator, whose long-standing friendship with De Witt Clinton and prominence in publie life lent unusual prestige to the board; Ebenezer Buckingham, a former canal commissioner and one of Ohio's wealthiest businessmen; and Allen Trimble, a leading figure in state politics. Trimble's tenure on the board was brief: he resigned in 1826 when elected speaker of the state senate. But his successor, Simon Perkins, was equally distinguished . The Ohio agent for the Connecticut Land Company, Perkins was also a leading Ohio banker; and like Brown, he enjoyed a wide range of business contacts in the financial community of the East.' Apart from appointing able commissioners, the legislature placed the full faith and credit of the state behind the authorized bond issues. This assured potential bond purchasers that if the construction effort foundered, or if the canals produced inadequate revenues, the general taxing power of the state would be employed to pay interest and principal on the canal debt. De Witt Clinton had advised that if Ohio backed its bonds in this way, it would "satisfy the most scrupulous capitalists,'" The accuracy of Clinton's prediction would need to be tested at once. For immediately after the canal law passed, the fund board solicited subscriptions to the authorized $400,000 bond issue of 1825 among the banks of Obio, hoping thereby to obtain concrete evidence of support within tbe state for the project; but the banks responded negatively, and the fund board then turned to the "scrupulous capitalists" of the East.' The continuing uncertainty as to whether Ohio bonds could find a market stimulated opponents of the canal plan to continue their fight. Having failed to influence the legislature, they now held public meetings in the "neglected" regions (by-passed by the projected canals), where popular opposition to the canal plan was strongest. They issued public resolutions asserting that the bond issues violated the state constitution, and rushed copies of such [3.95.231.212] Project MUSE (2024-03-29 14:18 GMT) OHIO CANAL ERA statements to castern newspapers in the hope of frightening off potential investors and defeating the loan.6 But more deeply rooted influences favored the fund board's mission in the East. In the first place, the leading merchants and bankers of ;-,rew Yark recognized well the potential value of an Ohio canal in expanding their trade into the West. According to Charles Haines, the prominent New York publicist for canals, it had long been taken for granted "tbat New York capital would sustain [the Ohio] enterprise,'" There was also the matter of profits that might be made from dealing in Ohio bonds, Many New York businessmen-among them John Jacob...