In June 1862 a flood on Swatara Creek damaged the western portion of the canal, completely destroying the Pine Grove feeder upon which the canal company depended for revenue. The flood prompted costly repairs that were compounded with continual water supply problems. The connecting railroad was leased to the Philadelphia and Reading Railroad on July 26, 1862, and sold outright in January 1866. The completion of the Lebanon Valley Railroad in 1857 from Reading to Harrisburg cut into the canal revenues, forcing its closure in 1881.
