In 1772, George Washington founded Potomack Company with a goal of connecting the Potomac with the Ohio and James rivers through a series of roads and canals. He first set his sights on improvements and developments on the Potomac.
Washington's first proposal was to build skirting canals around navigational barriers. In essence, a boat coming up to rapids or falls would be able to bypass these challenges by floating through a series of canals and locks.
While there were five areas that he deemed skirting canals a necessity, he was particularly interested in Great Falls. Unfortunately, the State of Maryland, who controlled the Potomac River, was not in favor of his proposal.
Washington attempted his proposal again in 1784. This time, he garnered the support of both Virginia and Maryland for a series of canals and locks along the Potomac River between Georgetown and Harpers Ferry.
The charter for Potomack Company (pictured) provided funding for 100 hands and a "reasonable quantity of spirits". However, as we saw in part one, the work was both difficult and dangerous, plaguing the company with injury, death, and turnover.
Further adding insult to the injury of labor problems, the weather was not particularly kind to the company and rapidly accumulating expenses threatened the continuation of construction. In 1785, George Washington appointed James Rumsey, inventor.James Rumsey the superintendent of fieldwork. However, Rumsey quickly resigned after one year, in part due to the problems plaguing the company and quarrels between management.
Work on the construction of the Potomack Company Canals was completed in 1802. At that time, the canals and locks opened for traffic.
In 1806, the Potomack Company excavated a 580-yard canal near Virginius Island. The Harpers Ferry locks at House Falls had been completed in years prior.
The company's most profitable year was in 1811. According to the Library of Congress, it was during this year that the canals and locks floated over 1,300 boats carrying over 16,350 tons of product, amounting to a worth of about $925,000. The company collected over $22,000 in tolls that same year.
The financial, management, and labor problems eventually became too much for the Potomack Company to shoulder. Traffic through the canal slowed to almost a halt, and the company filed for bankruptcy.
The Chesapeake and Ohio Canal broke ground on July 4, 1828, with a ceremonial groundbreaking by President John Quincy AdamsPresident John Quincy Adams . Adams, not used to physical labor, slammed the shovel into the ground only to have his spade rebound off of a root. Rolling up his sleeves, he thrust the shovel into the ground, turning up a very sparse amount of earth. This small dent in the earth marked the beginnings of a canal that would be plagued with volatility.
The C&O Canal turned into a large public works system, employing thousands of workers. By December 1829, the Second Residency alone employed 87 horses and 565 men. Throughout the 1830s, the entirety of the workforce fluctuated between 2,000 and 5,000 men.
The C&O Canal company was the inheritor of Potomac Company. Prior to the entrance of the C&O Canal, the Potomac Company had constructed a series of locks and artificial waterways during the period of 1785 to 1802. After construction, these waterways and locks had been left mostly untouched.
The goal of the new company was to follow the Potomac into the Appalachian Mountains, and joining up with the Ohio river system at Pittsburgh, continue on to the Mississippi river.
The canal project, aiming to connect the Atlantic to the Mississippi, was seen at the time as a promise of trade. After completion of the canal in 1850, it was traveled regularly by many Bakerton area residents.
The U.S. government saw canals as a necessary transportation system. It is estimated that between 1816 and 1840, over 125 million dollars were spent on the construction of canal waterways.
However, like many canal companies, this large, interregional business was constantly teetering on the edge of bankruptcy, plagued with labor and capital shortages.
During the first year of construction, the Federal Government purchased one million dollars worth of stock in the C&O Canal, however, state governments provided most funding. Despite the fact municipalities would benefit from such a transportation hub the most, municipal governments did not have enough funding to be involved in canal financing. Although the C&O Canal was promised 1.5 million each from Washington, Georgetown, and Alexandria, the canal company never received any of the promised funding.
Throughout the lifetime of the canal, the State of Maryland provided most of the funding for the C&O Canal, however the company also relied on sales of bonds in both domestic and volatile foreign markets.
Funding for the C&O Canal Company was strained almost from the beginning of construction. The 1830 depression exasperated this. Many states defaulted on canal loans, effectively closing off foreign investments. Before the canals’ completion, the State of Maryland bailed out the company so many times that executives had no choice but to mortgage every square inch of canal company holdings to the state.
The C&O Canal faced numerous organizational and financial turmoils, much like most other canal companies. The task of building such a phenomenon was monumental. The canal company faced problems such as securing and mobilizing adequate capital, assembling a workforce numbering in the thousands, providing for a large volume of workers, a terrifying amount of violence on the canal line, and later, governing a slew of contractors and controlling their quality of work.
In an attempt to reduce such organizational problems (and, in effect, creating new ones), the canal company hired independent contractors to complete large spans of the canal system, making the employee and employer mutually dependent upon one another and ensuring the canal company distanced itself from the burden of workers.
Early on, this mutual dependency was beneficial to the workers. The contractors during this period were usually men local to the construction area who were looking for an injection of cash. Although many of these men had experience in some areas of construction, few had a background in canal construction and even fewer had participated in contract work. During this time period, all classes of workers and employers typically worked together, broke bread together, and slept under the same roof.
During the panic of 1837, the separate classes of workers began to become more and more apparent, with the Irish and a small number of slaves performing the harshest, most physically demanding work.
Very quickly, contracting on the canal became “big business”, and instead of local men, men with ample working capital from other areas began to move in. Many of the C&O Canal’s contractors came directly from Ireland. Others were once skilled Irish laborers trying their hand at contracting, often returning to the laboring ranks after failure. Once one job was completed, the men would disperse in search of further work.
However, even as early as October 1828, the C&O Canal Company was accepting nonnative contractors. During this month, the company hired five contractors from New York, five from Pennsylvania, one from the city of Washington, and only 2 from Virginia. During the construction period, the company was also known to accept bids from contractors located in Canada.
These contractors’ employees were usually transient Irish immigrants, who did not stay employed with one contractor for very long. German was also a common nationality, albeit in much lower numbers than the Irish. While the Irish tended to be mobile, chasing work, German workers were more likely to settle in the area once work commenced.
Transient workers would often migrate in groups, following faction leaders, contractors they had formed a good relationship with, and occasionally a few allies. Canawlers with families would just as often travel alone, with only their immediate family to keep them company.
Before the 1840’s, these floating workers did not wander aimlessly looking for work. Canawlers had built an underground network of sorts, with workers spreading the word about working conditions, wages, and contractors. This hearsay allowed laborers to choose their destinations wisely.
The mobility of these workers can be seen as both a blessing and a curse. Laborers would use their nomadic tendencies as a bargaining chip to help them secure employment and once there, improve working conditions. If a contractor pushed a laborer too far, he simply would threaten to abandon his post. However, most workers needed their wages and understood that working conditions elsewhere were likely to be similar, or worse. More often than not, this was a tactic used sparingly.
Laborers were most often hired on a monthly basis, with wages set based on a set number of workdays (usually 24 or 26). The monthly wage would decrease for each day lost due to sickness, weather or lack of work. Day laborers were paid daily at what would appear to be a higher wage, but would not include room and board.
Occasionally, hands would be hired under a piece rate system, where the worker was paid based on the amount of work completed. This type of employment was resented by the majority of workers, and although advantageous to speedy, industrial workers, was not common. However, contractors were often paid based on this system, being paid a set amount per yard of excavation.
The canal company accepted bids from contractors on a per section basis, each section commonly being about a ½ mile in length. Contracts for these sections were highly competitive, with each section averaging over fifty bids. With its contractors, it was common practice for the canal company to accept the lowest possible bid. Alongside high competition, contractors were forced to estimate the absolute bare minimum, betting on luck to have enough working capital to complete their awarded section and turn a meager profit.
The canal company was aware that the bids were so low that the possibility of contractor failure was likely, but that risk was not on their shoulders -- instead, it lied on the back of the contractor. Failure to complete the awarded work was common as expenses too often overran the contractor’s bid and resources, forcing them to abandon work and flee, often leaving workers unpaid.
Further exacerbating the situation was that the canal company required the contractor to post bond, ensuring that the contractor and his men would not abandon work and would produce work up to quality standards. Although contractors were paid monthly by the company, a 20% retainer would be taken off the payment and held until the company deemed the work satisfactorily completed. Usually, the final payment was not made until two months after completion of work due to the canal company’s shaky financial situation. This allowed for little working capital for contractors to complete the contract.
Canal Engineers had the power to declare contracts abandoned if they felt work quality work was not completed or the work did not meet the contract. Many contractors complained that canal engineers were severely undervaluing completed work by hundreds of dollars, forcing many contractors into bankruptcy.
The Irish responded to abandoning contractors and non-payment of wages by destroying work for which they were not paid. The company countered this measure, by suspending operations in the area, firing violators, and replacing them with workers of any origin… except Ireland. In effect, workers began to be penalized simply for being Irish.
In an attempt to motivate contractors, in 1829 the canal company implemented a reward system. A silver cup, valued at $50 would be awarded to the contractor who completed the best lock, a $10 silver medal for the best culvert, and numerous less precious medals awarded for various other jobs.
But more often than not, contractors too often ended the contract with massive losses or were forced to abandon work, leaving jobs only half completed and their workers unpaid.
Contractor M. S. Wines was $3,000 dollars in debt with all of his property confined to Washington County, Maryland when he pleaded with the C&O to release all of his outstanding earnings to his creditors, wishing only for his liberty. Another contractor, W. W. Fenton, owing over forty men $19 a piece and being unable to pay for their labor, begged the canal company to pay his men “for the benefit of their families”.
In May 1829, a contractor assigned section 19 fled the line, leaving his workers in destitute condition, “sick, unpaid, and without medicine or provisions with no power to obtain any.” A contractor by the name of Thomas Walsh fled “poor, common laborers” each to whom he owed between $15 and $42.60. And yet another contractor, R. A. Clements was owed $270 by the canal when his workers demanded to be paid before his numerous creditors, for which the outstanding money would not even cover the bill.
The contractors suffered greatly, but the workers suffered the brunt of the blow.
Although there is one account of workers hiring an attorney to receive wages due, most hands, especially the Irish, took the law into their own hands. Contractors feared the viciousness of an unpaid, overworked, and intoxicated angry mob, and often, this fact hastened their disappearance.
In 1829, a contractor estimated his daily costs per worker to be 96.5 cents. Of that amount, 46.5 cents were allocated to wages and 30 cents to board, whiskey, and tools. Although laborers would forfeit wages when they were unable to work due to weather, the contractor’s board and whiskey cost continued. Workers were, however, held financially responsible for any lost or broken tools.
The following year, in 1830, C&O Canal contractor H.W. Campbell noted his employees, averaging the same rate across other contractors, were receiving $8 a month wages with much higher provisioning costs. Only two years later, wages had jumped to $10 to $14 dollars a month due to labor shortages.
In 1828, the average wages of a canal laborer without board were $10 to $12 a month. By 1833, those wages jumped to $15 to $17 a month, and to $1 - $1.25 a day without board in 1839.
For most contractors, board accounted for about 40% of the wage cost.
During November of 1830, Thomas Kavanagh & Co. lost half of a month of work due to rain. During this period, boarding costs quickly mounted. From this period on, the company forced workers to pay a half of their board on days lost.
After similar experiences, many contractors had similar ideals. During the winter of 1829-30, workers whose families lived on the canal line received only a cash wage, and were expected to pay for their own board and laundry.
Meanwhile, the canal company continued to fall further behind in its payments to contractors.
In the April through May period of 1834, the C&O Canal began paying its contractors in company scrip, which was currency backed up by the company’s assets. In this period alone, the company issued $128,705 in scrip payments. Not long after, the scrip was discounted by up to 33%. During the year of 1837, the canal company issued $436,513.30 in scrip payments.
*Canal Scrip Images Courtesy of Chosi.org
Unfortunately, scrip was paid by the canal often as the company, and the governments that financed it, started to falter under the weight of debt due to the canal project. This caused contractors to receive less than their already bare minimum bid for their work. Once again, the contractors were struggling to pay their laborers and their creditors.
The 1840’s brought a surplus of workers and a dwindling number of jobs. Once fueled by a small town-like communication network, transient workers found themselves traveling hundreds of miles in the hope that a company may have work for them when they arrive. This surplus of laborers caused wages to rapidly decline.
Adding to frustrations was the gap of time between when work commenced, and when workers were actually paid. Contractors usually did not pay the laborer until they had received proper payment from the canal company and had paid off all of its creditors. This process could take weeks. Too often, wages were left behind when the canaler moved to find further work.
This time gap also forced workers to purchase provisions on credit, of which prices were higher due to the risk of non-payment. While some contractors attempted to address this frustration by allowing workers to receive an advance on wages, the employee was forced to pay a fee for such services, further cutting into earnings.
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