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Economic impact

The Erie Canal greatly lowered the cost of shipping between the Midwest and the Northeast, bringing much lower food costs to Eastern cities and allowing the East to ship machinery and manufactured goods to the Midwest more economically. To give an example, the cost to transport a barrel of flour from Rochester to Albany dropped from $3 (before the canal) to 75¢ on the canal. The canal also made an immense contribution to the wealth and importance of New York City, Buffalo and New York State. Its impact went much further, increasing trade throughout the nation by opening eastern and overseas markets to Midwestern farm products and by enabling migration to the West. The port of New York became essentially the Atlantic home port for all of the Midwest. Because of this vital connection and others to follow, such as the railroads, New York would become known as the "Empire State" or "the great Empire State".

The Erie Canal was an immediate success. Tolls collected on freight had already exceeded the state's construction debt in its first year of official operation. By 1828, import duties collected at the New York Customs House supported federal government operations and provided funds for all the expenses in Washington except the interest on the national debt. Additionally, New York State's initial loan for the original canal had been paid by 1837. Although it had been envisioned as primarily a commercial channel for freight boats, passengers also traveled on the canal's packet boats. In 1825 more than 40,000 passengers took advantage of the convenience and beauty of canal travel. The canal's steady flow of tourists, businessmen and settlers lent it to uses never imagined by its initial sponsors. Evangelical preachers made their circuits of the upstate region, and the canal served as the last leg of the Underground Railroad ferrying runaway slaves to Buffalo near the Canada–US border. Aspiring merchants found that tourists were reliable customers. Vendors moved from boat to boat peddling items such as books, watches and fruit, while less scrupulous "confidence men" sold remedies for foot corns or passed off counterfeit bills. Tourists were carried along the "northern tour," which ultimately led to the popular honeymoon destination Niagara Falls, just north of Buffalo.

As the canal brought travelers to New York City, it took business away from other ports such as Philadelphia and Baltimore. Those cities and their states started projects to compete with the Erie Canal. In Pennsylvania, the Main Line of Public Works was a combined canal and railroad running west from Philadelphia to Pittsburgh on the Ohio River, opened in 1834. In Maryland, the Baltimore and Ohio Railroad ran west to Wheeling, West Virginia, then a part of Virginia, also on the Ohio River, and was completed in 1853.

The canal played a major role in the growth of Standard Oil, as founder John D. Rockefeller used the canal as a cheaper form of transportation – in the summer months when it was not frozen – to get his refined oil from Cleveland to New York City. In the winter months his only options were the three trunk lines: the Erie Railroad, the New York Central Railroad, or the Pennsylvania Railroad.