Unlike other Delaware towns, Delaware City started life as a boomtown—a speculative venture designed for quick profit and growth. The construction of the Chesapeake and Delaware Canal in the late 1820s was the catalyst for town development. The canal was intended to shorten the trip from Philadelphia to Baltimore and make the Delaware Bay and River the primary water-based route to Baltimore, with Delaware City strategically located to receive canal traffic. Boosters hoped that Delaware City might one day challenge Philadelphia in population and economic importance.
Running north-south, parallel to the original route of the Chesapeake and Delaware Canal, Clinton Street is Delaware City’s main commercial thoroughfare. Laid out as part of the town plan in 1826, the businesses along the street catered to workers constructing the canal, and after the canal opened in 1829, to passengers waiting for boats to be raised through the canal locks. Delaware City has become a shipping point for agricultural goods from surrounding countryside, which was one of the most productive agricultural areas in the eastern United States through the 1820s and 1830s. Wagons crowded the streets as farm families bought goods and sold goods.
In the 1820s, canals were most technologically advanced form of transportation available, and they spurred economic development for many American towns and cities. In the years before the railroad, the interior of the United States was reached mainly by rivers and other inland waterways—people and goods moved primarily on water.
However, rivers did not always go where they were needed to promote settlement and economic development. To create an interregional transportation system, Congress in 1807 directed Secretary of Treasury Albert Gallatin to prepare “a plan for the application of such means as are within the power of Congress, to the purposes of opening roads and making canals.” Gallatin’s report, published the following year, called for the construction of roads and canals and identified four necks of land that interrupted coastal navigation. Cutting across those necks with canals would create continuous coastal sailing from Boston to middle North Carolina. One of these necks was the short neck of the Delaware Peninsula where the Chesapeake and Delaware Canal would be built twenty years later.
Philadelphia investors promoted a canal across the narrow northern part of the Delmarva Peninsula as early as 1802. Although prominent architect Benjamin A. Latrobe was retained to survey the route, lack of capital killed the canal project. Even with the support of the Gallatin Report, the $175,000 needed to dig the canal ($25,000 form Delaware, $50,000 from Maryland, and $100,000 from Pennsylvania) was not raised until 1824.
When the canal opened in 1829, investors expected Delaware City, located at the mouth of the canal, to become a great port city. This was not an unreasonable expectation, since the largest cities in the United States were all ports, whose economies ran on the exchange of goods at the connection between inland water—ways and the ocean. Further north in New York State, construction of the Erie Canal led to the creation of boom towns such as Little Falls, Utica, Lockport, and others. Delaware City stood between two of the largest ports in the United States, Philadelphia and Baltimore, and the canal connected the Delaware Bay and Atlantic Ocean with the Chesapeake Bay. During peak canal use in the 1830s, substantial traffic of people and goods through the town ensured that the people of Delaware City were exposed to the latest fashions and trends.
Shortly after the construction of the canal, Delaware City became the staging ground for another massive project—the building of the great masonry fortress of Fort Delaware opposite the town on Pea Patch Island in the Delaware River. Delaware City became home to the craftsmen and laborers constructing Fort Delaware, and Clinton Street was the location for business, shopping, and socializing for all involved in the construction of the fort, a project that lasted nearly thirty years.
Following the construction of the canal and Fort Delaware, Delaware City remained an economically thriving small town, although it never achieved the aspirations of its founders. A branch line of the Philadelphia, Wilmington, and Baltimore Railroad terminated in Delaware City. The branch between Newark and Delaware City was constructed between 1871 and 1890 to connect the surrounding areas to the canal port. By 1900 there was also street car service in Delaware City connecting to New Castle and Wilmington.
Several events combined to detract from Delaware City’s prosperity, but the greatest were changes in the canal. The original owners of the canal, The Chesapeake and Delaware Canal Company, experienced serious financial problems and sold the canal to the federal government in 1919. The federal government then closed the canal for eight years for improvements designed to accommodate larger vessels. One of these improvements relocated the canal’s entrance two miles south of Delaware City at Reedy’s Point, ending the town’s function as a port. As shipping traffic waned, railway service also fell away and street car service was discontinued in 1930. Delaware City lost its importance as a marketplace and its economy began to decline.
Ironically, the abruptness of Delaware City’s decline contributed to the preservation of its historic buildings and to the historic integrity of the town. Delaware City did not experience economic pressures during the twentieth century that might have caused irreparable change or loss to its historic buildings, and many nineteenth century buildings survive today as important reminders of the town’s history.