The Potomac Company was created in 1785 to make improvements to the Potomac River

Potomac River

The Potomac River flows into the Chesapeake Bay, located along the mid-Atlantic coast of the United States. The river is approximately long, with a drainage area of about 14,700 square miles...

 in order to improve its navigability. The Potomac Company built five skirting canals around the major falls. When completed it allowed boats and rafts to float downstream towards Georgetown, a major port of the time on the Potomac River, now in the District of Columbia. George Washington

George Washington

George Washington was the dominant military and political leader of the new United States of America from 1775 to 1799. He led the American victory over Great Britain in the American Revolutionary War as commander-in-chief of the Continental Army from 1775 to 1783, and presided over the writing of...

 was its first president, as well as an investor in the company. Tobias Lear, Washington's personal secretary, was its chairman for a period. Other principals of the company included Thomas Johnson of Maryland.

The Potomac Company had the goal of linking the East Coast with the Old Northwest. The endeavor eventually failed due to a combination of factors such as an unstable American economy, unreliable government aid, and conflicts between states. Although the charter was surrendered to the Chesapeake and Ohio Canal Company in 1828, it is significant because it serves as an example of how a deficient amount of support from the federal government can undermine a large, desirable infrastructure project. The U.S. government was more conscious of the effects of its involvement in developing infrastructure in the fledgling republic.

While slim boats called bateaux could be poled up-river in even the shallowest of waters, they could not traverse the fall line

Fall line

A fall line is a geomorphologic unconformity between an upland region of relatively hard crystalline basement rock and a coastal plain of softer sedimentary rock. A fall line is typically prominent when crossed by a river, for there will often be rapids or waterfalls...

, the area where an upland region (continental bedrock) and a coastal plain (coastal alluvia) meet, typically in waterfalls.

One of the major constructions of the Potomac Company was the Patowmack Canal

Patowmack Canal

The Patowmack Canal is an inoperative canal located in Virginia, United States, that was designed to bypass rapids in the Potomac River upstream of the present Washington, D.C. area...

. A major engineering feat of the time, the Potomack Canal permitted boats to navigate around Great Falls

Great Falls of the Potomac River

The Great Falls of the Potomac River are located at the fall line of the Potomac River, upstream from Washington, D.C. Great Falls Park, operated by the National Park Service, is located on the southern banks in Virginia, while Chesapeake and Ohio Canal parkland is located along the northern banks...

, where the Potomac River drops a treacherous 75 feet through the unnavigable Mather Gorge

Mather Gorge

Mather Gorge is a river gorge south and just downriver of Great Falls on the border of Maryland and Virginia. The Maryland side of the gorge is Bear Island, part of the Chesapeake and Ohio Canal National Historical Park, and the Virginia side is part of Great Falls Park. Both parks are National...

.

After 21 years, the Potomack Canal was sold, along with the other assets of the Potomac Company to the Chesapeake and Ohio Canal

Chesapeake and Ohio Canal

The Chesapeake and Ohio Canal, abbreviated as the C&O Canal, and occasionally referred to as the "Grand Old Ditch," operated from 1831 until 1924 parallel to the Potomac River in Maryland from Cumberland, Maryland to Washington, D.C. The total length of the canal is about . The elevation change of...

 Company, which built a canal on the opposite, Maryland

Maryland

Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...

 side of the Potomac River.

History

As early as 1749 many leaders in Maryland and Virginia had been interested in making the Potomac River into a major transportation route to the trans-Appalachian West. The project to improve the Potomac was seen as a major opportunity strategically (it would transport troops to the frontier with the French or the Indians more rapidly) and economically (it would increase fur trade and improve real estate values). A lack of technology, a severe shortage of labor, conflicts with foreign and colonial powers, and internal rivalries would prevent the project from being started until the 1780s, thirty years later.

In 1784, a year after the Treaty of Paris was signed, George Washington and Horatio Gates traveled to Annapolis to seek the state's assent to the project. Washington urged Virginia Governor Benjamin Harrison to bring the matter to the Virginia Assembly, citing the "commercial and political importance" of the project. Washington's formidable reputation in the U.S. during the time after the Revolution persuaded the governor to present a letter to the Virginia Assembly asking for support for the project. The Virginia Assembly appointed Washington, Gates, and Thomas Blackburn to seek Maryland's agreement. Washington's subsequent visit to Annapolis was successful and led to the incorporation of the Potomac Company in 1784 Maryland and in 1785 in Virginia.

While it was not the first or only project started after the end of the American Revolution, its incorporation was a milestone because it was the first project that connected different regions and required the cooperation of multiple state governments. While the Potomac Company’s charter eventually failed, the Maryland and Virginia acts of incorporation were very similar—the company stated it was going to raise 220,000 Spanish dollars (50, 000 pounds sterling) through 500 shares and also stated its plan and timeline. In the charter, the Potomac Company had three years to clear the upper Potomac, and ten years to build a bypass canals and locks around the Little and Great Falls (a distance of 175 miles). Both states passed additional laws to go further—building roads and connecting headwaters in order to link the Potomac River to the Ohio River.

The Potomac Company originally wanted to hire only free labor, but due to the shortage of labor, the directors hired free, indentured, and slave labor to build the locks and canals and deepen the river. James Rumsey, a well known for his work with steam-propelled riverboats, was hired as the project’s chief engineer.

There was a large conflict with Virginia Governor Henry Lee (father of Robert E. Lee), who purchased 500 acres of land around Great Falls (he named it “Matildaville” after his wife) to build a warehouse for goods being transported down the Potomac (predicting the route would quickly become profitable after the project’s completion). The legal troubles of the Potomac Company kept its lawyers in and out of court incessantly.

The decline in public confidence in the project led to a more difficult economic position, because the Potomac Company relied on individually buying shares for funds. Maryland and Virginia continued funding the Potomac Company’s project beyond the original contract. However even continued investment by Maryland, Virginia, and some individuals could not offset growing expenses due to poor technical advice, labor problems, poor planning and incessant repair work. The work was stop and go because of the continuous need to raise more money. At many points in the project’s history (for example in) all work would stop as the company begged for economic assistance, settled lawsuits, and revised its plan.

In February 1802, the locks at Great Falls were completed, and the Potomac Company was expected to be immediately profitable. Also in 1802, the Patowmack Canal was completed after 17 years of construction. However, the poor snow in the winter of 1801-1802 and little spring rain in 1802 meant the river was too shallow to navigate that year. The late realization of these unanticipated problems caused the company to give up its earlier goal to link the Potomac and the Ohio Valley, and the new goal was to improve other rivers in the watershed such as the Shenendoah, the Monocacy, and the Antietam.

A commission in 1821 agreed that water transport in the Potomac valley would only be possible with a still-water canal, and the Potomac Company announced it could not fulfill its charter. Virginia created the Potomac Canal Company. Maryland incorporated the Chesapeake and Ohio Canal Company in 1825, and congress quickly approved its charter.

Economic Impact

The failure of the Potomac Company to make the Potomac River navigable does not mean that that project was without serious economic implications. The failure of the Potomac Company was largely attributed to a lack of federal support and oversight, and the U.S. government was much more careful to support interstate infrastructure projects thereafter. The significance of transportation in such a large country cannot be understated, and the failure of such a large project made clear that expensive (but in the long term, profitable) infrastructure projects would not be achieved without support from the federal government.
Further, the Potomac Company’s plan made it possible for the Chesapeake and Ohio Canal Company to take over and complete the project. These two regions were linked, and goods and services moved through the Potomac for nearly a century.

Legacy

In his will, Washington left fifty shares toward the endowment of a university in the District of Columbia. The shares were lost, however.

The Potomac Company, an investment bank based in Philadelphia, is not related in any way to the original Potomac Company referenced above.