The Welland Canal: How Canada Built a Staircase for Ships and What It Has Been Worth

Between Lake Erie and Lake Ontario, the land drops about 99.5 metres (326 feet). Most of that fall happens at the Niagara Escarpment, and part of it at Niagara Falls. For ships, it is an impassable wall. For almost two centuries, the Welland Canal has been the way around it.

The canal runs about 43.5 kilometres across the Niagara Peninsula, from Port Colborne on Lake Erie to Port Weller on Lake Ontario. Eight locks lift and lower ships the full 99.5 metres, and a transit takes about eleven hours. Without it, the Great Lakes above Niagara would be cut off from the Atlantic, and the grain of the prairies and the iron ore of Minnesota and Quebec would have to reach the sea by some slower, costlier route.

This article covers how the canal was built (four times over), what it cost, what it costs to keep running, and what it has been worth to Canada and the United States. Where figures are my estimates rather than published numbers, I say so and show the working.

Four Canals, Not One

The canal you can watch today at the Welland Canals Centre in St. Catharines is the fourth version. Each generation was built larger and on a straighter line than the one before, because the ships kept outgrowing the locks.

Canal	Built	Locks	Lock size	Minimum depth	Notes
First	1824 to 1829 (extended to Port Colborne 1833)	40, wooden	33.5 m by 6.7 m	2.4 m (8 ft)	Private company; about 44 km long
Second	1841 to 1845	27, cut stone	45.7 m by 8.1 m	2.7 m (9 ft)	Built after the government took over
Third	1872 to 1887 (deepened to 14 ft)	26, stone	82.3 m by 13.7 m	4.3 m (14 ft)	Straighter route; operated until 1935
Fourth (Welland Ship Canal)	1913 to 1932 (dredging to 1935)	8	233.5 m by 24.4 m	8.2 m (27 ft) today	Opened August 6, 1932; the canal still in use
Welland By-Pass	1967 to 1973	None (channel realignment)	Not applicable	Seaway depth	New 13.4 km channel avoiding downtown Welland

Sources: Wikipedia, “Welland Canal”; St. Lawrence Seaway Management Corporation; The Canadian Encyclopedia.

The First Canal: A Mill Owner’s Gamble

The canal began with a practical problem. William Hamilton Merritt, a mill owner on Twelve Mile Creek near St. Catharines, needed a reliable water supply for his mills. He saw that the same water could carry boats. A canal around Niagara would also let Upper Canada compete with New York’s Erie Canal, which was nearing completion and threatened to pull the trade of the upper Great Lakes through American ports.

The Welland Canal Company was incorporated by the Province of Upper Canada in January 1824, with an initial capitalization of CAD 150,000. Canadians were reluctant to invest. Merritt complained that “everybody wishes the undertaking well but when it comes to the needful they keep their hands from paper.” The breakthrough came from New York, where businessman John Barentse Yates bought about 600 shares.

Costs quickly outran the plan:

Between 1825 and 1830, the company took at least four loans of GBP 25,000 each from the Upper Canada government.
The British Imperial government lent another GBP 50,000.
In 1831, Upper Canada lent GBP 50,000 more to extend the canal to Port Colborne.
The province bought shares directly until it could appoint three directors to the board.

The first canal cost roughly GBP 500,000, about GBP 350,000 over budget, according to the St. Catharines Museum. It was the most expensive infrastructure project in the colony’s history to that point. By 1841, the government had bought out the private shareholders and owned the canal outright. Canadian taxpayers have owned it ever since.

Construction was brutal, hand-dug work done largely by immigrant labourers, many of them Irish, living in shantytowns along the route. The engineering was improvised. On November 9, 1828, the walls of the “Deep Cut” near Port Robinson collapsed into the excavated channel, killing an unknown number of workers. The plan to draw water from the Welland River had to be abandoned. Crews then built a Feeder Canal from the Grand River in 177 days, and the schooner Anne & Jane made the first transit, upbound to Buffalo with Merritt aboard, on November 30, 1829.

The Second and Third Canals: The State Takes Over

Once in public hands, the canal was rebuilt properly. The second canal (1841 to 1845) replaced rotting wooden locks with cut stone and cut the number of locks to 27. By 1848, a 9-foot channel ran all the way from Lake Erie to the Atlantic.

The third canal (1872 to 1887) was a product of Confederation and the ambition of the new Dominion. It cut a straighter route through the escarpment with 26 larger stone locks and was deepened to 14 feet by 1887. It included remarkable details such as the Merritton Tunnel, which carried the Grand Trunk Railway under the canal. I could not find reliable published totals for the construction costs of the second and third canals, so I leave them out rather than guess.

The Fourth Canal: The Welland Ship Canal

By the early twentieth century, the lake freighters carrying western grain and ore had outgrown the third canal. In 1913 the federal government began an entirely new canal. It had eight enormous locks, each 233.5 metres long and 24.4 metres wide, and a channel wide enough for two large ships to pass.

How It Was Built

Excavation: steam shovels, dredges and rail cars moved millions of cubic metres of earth and rock. Much of the route, including the approach to Lake Ontario at Port Weller, was cut through new ground.
Concrete: the locks were massive concrete structures, a new technology on this scale in Canada.
The Flight Locks: at Thorold, Locks 4, 5 and 6 were built as twin “flight locks”, a staircase of three linked chambers side by side so that upbound and downbound ships can pass at once. They carry ships up and down the steepest part of the escarpment and remain the canal’s most famous feature.
Lock 8: at Port Colborne, a control lock, adjusts for the varying level of Lake Erie.
Wartime pause: construction stopped from 1916 to 1919 because workers and materials were diverted to the First World War. It resumed in 1919 under chief engineer Alexander J. Grant.

At peak, about 4,000 men worked on the project at once, and many thousands more over its two decades. The canal opened on August 6, 1932, and dredging to its full 25-foot depth was finished in 1935.

The Human Cost

The Welland Ship Canal is remembered for its engineering, but it took a heavy toll. At least 137 workers died building it, from drowning, electrocution, falling objects, crushing, falls and being buried alive. A study of the fatalities describes this as the largest loss of life on any Canadian government infrastructure project. The deaths led to better protections on later public works, including first aid, hospital facilities and more formal accident reporting. A Fallen Workers Memorial was unveiled near Lock 3 in St. Catharines in 2017.

What It Cost

The 1913 estimate was CAD 50 million for about five years of work. A 1931 account put the actual cost at about CAD 120 million over 17 years, and later sources give a final cost of about CAD 130 million, more than two and a half times the original estimate.

Adjusted for inflation, CAD 130 million in 1932 is roughly CAD 2.6 billion to 3.3 billion in today’s money. This is my estimate, using a Canadian price-level increase of about 20 to 25 times since 1932.

Deepening and the Welland By-Pass

When the St. Lawrence Seaway opened in 1959, the Welland Canal was deepened to the Seaway standard of 27 feet and became its central link. The Seaway itself cost about USD 470 million to build between 1954 and 1959. Canada paid USD 336.2 million and the United States USD 133.8 million, according to The Geography of Transport Systems. The Welland Canal was already Canadian-built and Canadian-owned, so the United States paid nothing toward it.

Traffic surged after 1959, and the canal’s route through downtown Welland became a bottleneck. From 1967 to 1973 the St. Lawrence Seaway Authority built the Welland By-Pass, a new 13.4 km channel 100 metres wide, with two tunnels (Main Street and Townline) carrying road and rail traffic under the canal. It cost about CAD 188 million, against a 1965 estimate of CAD 134 million. That is roughly CAD 1.2 billion to 1.4 billion today (my estimate).

Summary of Construction Costs

Project	Period	Recorded cost	Rough modern equivalent (estimate)	Paid by
First canal	1824 to 1833	About GBP 500,000	Not estimated (currency conversion too uncertain)	Private company, Upper Canada and British loans, some US investors
Second canal	1841 to 1845	Not found in reliable sources	Not estimated	Province of Canada
Third canal	1872 to 1887	Not found in reliable sources	Not estimated	Dominion of Canada
Fourth canal	1913 to 1935	About CAD 130 million	CAD 2.6 billion to 3.3 billion	Government of Canada
Welland By-Pass	1967 to 1973	About CAD 188 million	CAD 1.2 billion to 1.4 billion	St. Lawrence Seaway Authority (Canada)

The pattern is familiar from large infrastructure: every major phase ran well over its estimate. The first canal cost more than three times its plan, the ship canal about two and a half times, and the by-pass 40% more.

What It Costs to Run and Maintain

Since 1998, the Canadian locks, including all eight on the Welland Canal, have been operated by the St. Lawrence Seaway Management Corporation (SLSMC). It is a not-for-profit company run by users and industry. The assets remain federally owned through Transport Canada. The SLSMC pays day-to-day costs and part of asset renewal from tolls and other revenue, and Transport Canada funds the remaining renewal costs.

The SLSMC does not publish a Welland-only budget, but its accounts for the whole Canadian Seaway give a clear sense of scale.

SLSMC, fiscal 2022/23	CAD
Total revenue	92.9 million
Of which tolls	77.8 million
Operating expenses, excluding non-cash items	67.7 million
Operating expenses, including non-cash items	100.6 million
Asset renewal spending	75.3 million
Of which regular maintenance	13.2 million
Of which major maintenance	60.5 million
Of which capital acquisitions	1.6 million

Source: SLSMC Annual Corporate Summary 2022/23.

Two observations:

Tolls do not pay for everything. Revenue of about CAD 93 million covers operations. The long-term renewal of 1930s-era concrete locks, bridges and mechanical systems depends on federal money.
Renewal spending is rising. In December 2024 the SLSMC announced more than CAD 350 million of work over three years to March 2027, with CAD 180 million earmarked for the Welland Canal: locks, bridges, energy infrastructure and mechanical and structural systems. Separately, a CAD 45.3 million rehabilitation of three wharves at Port Colborne, CAD 22.7 million of it federal, was announced in January 2023.

My estimate of the Welland Canal’s annual cost is roughly CAD 100 million to 130 million a year. That is about half of SLSMC’s operating costs plus about CAD 60 million a year of renewal (from the CAD 180 million three-year plan). It is an estimate, not a published figure.

What It Has Been Worth

This is the hardest question to answer precisely, and anyone who gives a single confident number is guessing. What can be measured is traffic, cargo value, economic activity and transport cost savings. Here is what the published figures say, followed by my rough estimate of cumulative value.

Traffic

Period	Welland Canal traffic
1928	7.4 million tons (record before the ship canal)
1959	Seaway opens; about 8,000 vessel transits a year
1979	66.2 million tonnes, the all-time peak
1993 and 2003	31.8 million tonnes, the lows
2024	26.6 million tonnes and 3,098 transits

Sources: navalmarinearchive.com (1931 account), The Canadian Encyclopedia, SLSMC 2024 Traffic Report.

The canal carries mostly bulk goods: grain from the Canadian and American prairies heading to export, iron ore and coal for steel mills, road salt, stone, cement and petroleum products. Traffic peaked in the late 1970s. Shipping on the Great Lakes has since been squeezed by the decline of heavy industry, the rise of container shipping (which the canal’s locks cannot efficiently serve) and a navigation season that closes for about three months each winter.

Economic Activity Today

The most recent independent study, by Martin Associates (July 2023, using 2022 data), estimates that the St. Lawrence Seaway itself, including the Welland Canal, supports:

USD 9.5 billion a year in economic activity (USD 4.9 billion in the United States and USD 4.6 billion in Canada);
66,594 jobs, of which 22,755 are direct;
USD 1.7 billion a year in tax revenue.

The wider Great Lakes-St. Lawrence Seaway system supports USD 36.0 billion of annual economic activity and 241,286 jobs. Much of that system depends on the Welland Canal for access between the upper lakes and the ocean.

Cumulative Cargo

The SLSMC reports that 3.07 billion tonnes of cargo moved through the Seaway between 1960 and 2022. Its public facts page puts earlier cumulative cargo of more than 2.5 billion tonnes at an estimated value of CAD 375 billion. In 2024, Welland Canal traffic was about 72% of total Seaway tonnage (26.6 of 37.0 million tonnes).

A Rough Estimate of Total Value

Here is my own estimate, with every assumption stated. Treat the results as orders of magnitude, not precise figures.

Measure	Assumption	Estimate
Cargo through the Welland Canal since 1959	About 70% to 75% of 3.07 billion Seaway tonnes, plus 2023 to 2025	About 2.2 billion to 2.4 billion tonnes
Cargo through the Welland Ship Canal from 1932 to 1958	About 10 million to 20 million tonnes a year for 27 years	About 0.3 billion to 0.5 billion tonnes
Nominal value of cargo carried since 1959	About CAD 150 per tonne (SLSMC ratio of CAD 375 billion to 2.5 billion tonnes)	About CAD 330 billion to 360 billion
Transport cost savings to shippers since 1959	A 2020 US DOT figure of USD 3.6 billion a year for the Seaway (about USD 95 per tonne), applied to Welland tonnage	Very roughly USD 100 billion to 250 billion in today’s dollars

The last line is the most meaningful and the least certain. The value of a canal is not the value of the cargo it carries, since that grain and ore would still exist. Its value is what shippers save compared with the next-best route by rail or truck, plus the industries that could only locate where water transport was available. The USD 3.6 billion a year savings figure comes from an article by the US Secretary of Transportation in 2020, which did not cite its underlying study. So I use it only as the basis for a wide range.

Against this, the canal’s construction costs total perhaps CAD 5 billion to 6 billion in today’s money for the fourth canal and the by-pass, plus decades of operating and renewal costs. Even at the low end of the estimated savings, the return on the investment has been very large.

How the Benefits Split Between Canada and the United States

The split is striking:

Canada built and paid for the Welland Canal. The United States contributed nothing to its construction, and it is operated by a Canadian corporation on federally owned land.
The United States captures about half of the benefit. In the 2023 Martin Associates study, the Seaway’s USD 9.5 billion of annual economic activity split USD 4.9 billion to the United States and USD 4.6 billion to Canada. The 2025 traffic report shows downbound iron ore and coal flowing heavily to US ports such as Toledo and Fairport Harbour. US grain from Duluth-Superior and Toledo uses the canal to reach export markets.
Users pay tolls regardless of flag or nationality. US shippers help cover operating costs through those tolls, but not the historic capital cost.

The Welland Canal is therefore one of the largest Canadian gifts to the American Midwest. In economic terms it is a shared asset: steel mills in Ohio and Indiana, farmers in Minnesota and Saskatchewan, and ports on both sides of the lakes all depend on it.

Challenges Ahead

Ageing infrastructure: the locks are more than 90 years old. Renewal spending has to rise to keep reliability above the 99% the SLSMC reports.
Lock size: the locks were designed in the 1910s. The largest modern ocean ships (“Salties”) and container ships cannot fit, which limits growth.
Seasonal closure: the canal closes for about three months each winter, which pushes time-sensitive cargo to rail.
Changing cargo: coal and iron ore volumes are declining over the long term. Growth depends on grain, potash, liquid bulk and project cargo.
Climate and water levels: lake levels and ice seasons affect draft limits and season length.

Conclusion

The Welland Canal is one of Canada’s great, understated achievements. It began as a mill owner’s gamble financed partly by New York money and British loans. It became a public asset when the private company failed, and it was rebuilt three times as ships grew. Its current form was built between 1913 and 1932 at a cost of CAD 130 million and the lives of at least 137 workers. It still lifts ships over the Niagara Escarpment every day of the navigation season.

It costs about CAD 100 million a year to run and renew, by my estimate. It carries about 25 million to 40 million tonnes of cargo a year, and it supports billions of dollars of economic activity on both sides of the border. Measured by the transport savings it has delivered, it has repaid its construction cost many times over. Canada paid for it, and the United States has shared almost equally in the benefit.