Simultaneously with the building of turnpikes was the construction of artificial waterways known as canals. The former method was not, as some writers have stated, a forerunner of the latter. Nor was it expected that these two systems of transportation should compete, since canals would necessarily be restricted by nature to a few localities. It would be more logical and closer to the facts to say that during the mania for canal-building the people of the United States regarded them merely as great trunk lines of commerce and communication toward which wagon roads of every description would naturally converge.

The first great success in canal-building in the United States was the Erie Canal, begun in 1817 and opened to navigation in 1825. Spurred on by a desire to share with New York City the prosperity of the western trade, Philadelphia and Baltimore persuaded their respective states to project similar enterprises. Soon the canal craze spread westward. Ohio built two, connecting Lake Erie and the Ohio River; Ohio and Indiana combined to join Lake Erie to the Ohio River at Evansville; while Illinois, with a much simpler task than either Ohio or Indiana, built the Illinois-Michigan Canal, connecting the Illinois River and Lake Michigan. It is safe to say that every one of these canals had a beneficial influence on the settlement of the Middle West, though none of them lived up to the expectation of its more optimistic supporters. They failed, not necessarily because they were poorly constructed or poorly located, but only after the railroad had demonstrated its superiority as a means of transportation.