When the Erie Canal was completed in 1825, it spanned New York State from the Hudson River in Albany to Lake Erie in Buffalo. Although the canal did not receive much support when construction began, the years of hard labor paid off. The Erie Canal proved to be an enormous benefit to New York and the United States as a whole.

New York City immediately saw benefits from the Erie Canal. Before the canal, New York had been competing unsuccessfully with other ports, such as Boston, Baltimore, Philadelphia, and New Orleans, for business and access to markets.

The opening of the Erie Canal created an explosion of trade for New York businesses. Shipping costs from New York to the Midwest dropped from $100 a ton to less than $10 a ton, and the time it took to ship the goods was cut down by a third. Upstate New York and points farther west that had rich lands drew in a huge influx of settlers. This opened up new markets for New York and promoted the financial and physical growth of cities along the canal route.

The canal also created easy access for European businesses wanting to reach the Midwest. Until the Erie Canal was built, no port city had an all-water route to the Midwest, except for New Orleans, which was much farther from Europe. New York City quickly became the financial capital of the nation and the main international gateway to the resources of the Midwest.

This physical and commercial connection between the East Coast and the Midwest also proved to be politically valuable. In this time of great national expansion and change, the canal created a bond between the people living in the East and West, strengthening the Union.

Some historians have suggested that the outcome of the Civil War may have been different if the Erie Canal had not been constructed. Before the canal, the few settlers in the Midwest were mostly Southerners who had come up the Mississippi, Missouri, and Ohio Rivers. With the opening of the canal, Northerners became the dominant group in the Midwest. They began to influence the politics and culture of the region. The economic success of the region now depended upon the East–West trade along the canal. Without the canal, the primary trade route might have been down the Mississippi River to New Orleans, strengthening the alliance between the West and the South.

In fact, some historians believe that the canal may have played a role in curbing slavery in the North and Midwest. When the North began to rely on the Midwest for agricultural resources, as well as the profits from the export of these products, it became less reliant on the South. And while the South focused more on plantation crops like cotton, the small farms of the Midwest became the food-growing center for the nation. Thus the North became less dependent on the South for certain resources. At the same time, the North grew rich from trade with Europe and the Midwest. In contrast, the South, with its slave economy, became the weaker region.

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