Lancaster Lateral Canal Company ledger

The Lancaster Lateral Canal was the predecessor of the Hocking Valley Canal, running between the main Ohio Canal route and Lancaster, Ohio. Constructed with the aid of short term loans from the local Lancaster bank, the Lateral Canal appears to have been built between 1826-1834.

In the summer of 1820, Charles Haines of New York wrote to Governor Ethan Allen Brown of Ohio on the subject of prospects for construction of an "Ohio Canal" which might be built between Lake Erie and the Ohio River. Following the nationwide financial panic of 1819 and the continued depression into 1821 and 1822, Ohio's political leaders were pessimistic that funding for such a project would be available. However, after much debate, the state's leaders became aware that an improvement in transportation such as a canal between Lake Erie and the Ohio River could boost the economy through internal trade and higher production.

Construction of the Ohio Canal was approved in February 1825. The canal routes approved for construction were a Cleveland to Columbus route, passing through towns such as Akron, Massilon, and Newark and a route from Columbus to Portsmouth passing through Circleville and Chillicothe.

During the Transportation Movement (1825-1838) the demand rose for more efficient transportation throughout the entire state, not only in the eastern and southern sections. During this period, ten proposals were presented to the Ohio state legislature for new railroads and canal extensions. Among these was a proposal for the Hocking Valley Canal route which would run from Lancaster (Lancaster Lateral Canal) through to Logan and Athens. Athens at this time had extensive deposits of salt and coal but cheap reliable transportation for these commodities was not available.

Land for the Hocking Valley Canal route was purchased by the state of Ohio; approval for its construction passed the state legislature in 1836. The route of the canal incorporated the old Lancaster Lateral Canal (bought by the state in 1838) and a 56-mile extension southeast to Athens. Because of major changes in engineering plans, sickness among laborers, and the bankruptcy of many contractors, the line did not reach the salt and coal region near Athens until 1842. The complete 56 mile line was opened a year later.

The Lancaster Lateral Canal was therefore the predecessor of the Hocking Valley Canal; to be exact, the construction of the Lateral Canal had been proposed in 1825 when the Ohio Canal was approved. The merchants of Lancaster (in 1825) obtained a charter for a private company to construct the "Lancaster Lateral Canal" between the main canal route and their town. The town's newspaper encouraged the construction of the canal by warning the people of Lancaster that unless the canal were built, all of the town's trade would be diverted to Newark (on the main route).Lancaster's own future would then hold only "decay, ruins and desolation." However, it wasn't until 1831 that private investors, most of whom were Lancaster merchants and millers, presented sufficient funding to begin construction. With the aid of short term loans from the local Lancaster bank, the Lateral Canal was built in 1834 at a cost of $37,000. (The exact date of completion is questionable. Some references post the date as Feb. 8, 1826 (a difference of 8 years).)