structural:scholar_edition
19th century

Competition, from railways from the 1830s and roads in the 20th century, made the smaller canals obsolete for most commercial transport, and many of the British canals fell into decay. Only the Manchester Ship Canal and the Aire and Calder Canal bucked this trend. Yet in other countries canals grew in size as construction techniques improved. During the 19th century in the US, the length of canals grew from 100 miles (161 km) to over 4,000, with a complex network making the Great Lakes navigable, in conjunction with Canada, although some canals were later drained and used as railroad rights-of-way.

In the United States, navigable canals reached into isolated areas and brought them in touch with the world beyond. By 1825 the Erie Canal, 363 miles (584 km) long with 36 locks, opened up a connection from the populated Northeast to the Great Lakes. Settlers flooded into regions serviced by such canals, since access to markets was available. The Erie Canal (as well as other canals) was instrumental in lowering the differences in commodity prices between these various markets across America. The canals caused price convergence between different regions because of their reduction in transportation costs, which allowed Americans to ship and buy goods from farther distances much cheaper. Ohio built many miles of canal, Indiana had working canals for a few decades, and the Illinois and Michigan Canal connected the Great Lakes to the Mississippi River system until replaced by a channelized river waterway.

Three major canals with very different purposes were built in what is now Canada. The first Welland Canal, which opened in 1829 between Lake Ontario and Lake Erie, bypassing Niagara Falls and the Lachine Canal (1825), which allowed ships to skirt the nearly impassable rapids on the St. Lawrence River at Montreal, were built for commerce. The Rideau Canal, completed in 1832, connects Ottawa on the Ottawa River to Kingston, Ontario on Lake Ontario. The Rideau Canal was built as a result of the War of 1812 to provide military transportation between the British colonies of Upper Canada and Lower Canada as an alternative to part of the St. Lawrence River, which was susceptible to blockade by the United States.

In France, a steady linking of all the river systems – Rhine, Rhône, Saône and Seine – and the North Sea was boosted in 1879 by the establishment of the Freycinet gauge, which specified the minimum size of locks. Canal traffic doubled in the first decades of the 20th century.

Many notable sea canals were completed in this period, starting with the Suez Canal (1869) – which carries tonnage many times that of most other canals – and the Kiel Canal (1897), though the Panama Canal was not opened until 1914.

In the 19th century, a number of canals were built in Japan including the Biwako canal and the Tone canal. These canals were partially built with the help of engineers from the Netherlands and other countries.

A major question was how to connect the Atlantic and the Pacific with a canal through narrow Central America. (The Panama Railroad opened in 1855.) The original proposal was for a sea-level canal through what is today Nicaragua, taking advantage of the relatively large Lake Nicaragua. This canal has never been built in part because of political instability, which scared off potential investors. It remains an active project (the geography has not changed), and in the 2010s Chinese involvement was developing.

The second choice for a Central American canal was a Panama Canal. The De Lessups company, which ran the Suez Canal, first attempted to build a Panama Canal in the 1880s. The difficulty of the terrain and weather (rain) encountered caused the company to go bankrupt. High worker mortality from disease also discouraged further investment in the project. DeLessup's abandoned excavating equipment sits, isolated decaying machines, today tourist attractions.

Twenty years later, an expansionist United States, that just acquired colonies after defeating Spain in the 1898 Spanish–American War, and whose Navy became more important, decided to reactivate the project. The United States and Colombia did not reach agreement on the terms of a canal treaty (see Hay–Herrán Treaty). Panama, which did not have (and still does not have) a land connection with the rest of Colombia, was already thinking of independence. In 1903 the United States, with support from Panamanians who expected the canal to provide substantial wages, revenues, and markets for local goods and services, took Panama province away from Colombia, and set up a puppet republic (Panama). Its currency, the Balboa – a name that suggests the country began as a way to get from one hemisphere to the other – was a replica of the US dollar. The US dollar was and remains legal tender (used as currency). A U.S. military zone, the Canal Zone, 10 miles (16 km) wide, with U.S. military stationed there (bases, 2 TV stations, channels 8 and 10, Pxs, a U.S.-style high school), split Panama in half. The Canal – a major engineering project – was built. The U.S. did not feel that conditions were stable enough to withdraw until 1979. The withdrawal from Panama contributed to President Jimmy Carter 's defeat in 1980.