Proposed by William Penn in 1690 to tap the agricultural wealth of the Commonwealth and give access to a second settlement on the Susquehanna River, the Canal was the first ever surveyed in the United States. This was done by David Rittenhouse and William Smith in 1762 and 1770.
First charted as the Schuylkill and Susquehanna Canal Co., work was begun in 1792 under the direction of William Weston, an English Engineer. Several miles of the Canal were dug and 5 locks were built between Myerstown and Lebanon before financial difficulties caused the work to cease. It was this area that President George Washington visited in 1793.
The State Legislature granted permission to raise $400,000 by lottery in 1795. In two decades and fifty drawings, $33 million was awarded in prize money; but only $270,000 reached the coffers of the Canal Company. This was the largest canal lottery in the nation's history.
Reorganized in 1811 as the Union Canal Company of Pennsylvania with Samuel Mifflin as President, work began in 1821 and the Canal was completed for the opening in 1828. A branch canal was finished in 1832, reaching from the Water Works north to Pine Grove to tap the coal fields and supply much needed water for the Summit Level. The Canal required an elaborate pumping system to keep the Summit Level from going dry. Canvass White, of Erie Canal fame, was the chief engine with Simeon Guilford as his assistant. The cost was in excess of six million dollars.
The 102 locks of the Canal were built too small (8 ½' x 75') and could not accommodate the larger boats from the Pennsylvania Canal and the Schuylkill Canal. Enlargement took place in the 1850's increasing lock size to 17'x90'. A flood in June of 1862 devastated the Canal from Pine Grove to Middletown. Costly repairs, continual water problems, and the completion of the Lebanon Valley Railroad in 1857 from Reading to Harrisburg reduced the revenues and caused the closing of the Union Canal in 1885.