As a result of the American War of Independence, thousands of people who remained loyal to the British Crown moved northwards to Canada. The government immediately began identifying areas suitable for the development of settlements for the loyalists. The Cataraqui and the Rideau rivers was one of the areas surveyed and by 1800, a number of mills had been built, the first, at Kingston Mills, in 1784. Within a few years, there were mills at most of the major falls along the two rivers. However the difficulty of navigation along the rivers north to the St Lawrence river, the main settlement area, hindered much concentrated development.
The impetus to improve the waterway came though not from agriculture or other economic stimuli but from the needs of defence. The War of 1812-1814 between Britain and the United States of America had brought into focus the vulnerability of the St Lawrence River as the main supply line for the colony. Not only was it slow with a series of rapids, but it was vulnerable to attack from America along much of its length between Montréal and Lake Ontario. After the end of hostilities, America was still seen as a potential threat and the need for a secure military supply route a key necessity. Accordingly military planners turned their attention to the Cataraqui and the Rideau rivers.
After an exploratory mission, at the end of the war, the canal project was really launched in 1824-1825, with two studies, one by the civil engineer Samuel Clowes, at the request of the authorities of Upper Canada, and the other at the request of the Duke of Wellington, then commander-in- chief of the army. The strategic dimension of the canal led the British government to take charges of its realisation.
Lieutenant Colonel John By of the Royal Engineers Corp was appointed by the British Government to supervise the construction of the canal in 1826. Before his appointment, military engineers had mapped out a scheme to construct new channels to bypass the rapids and swamps along the rivers. This would have necessitated around 40km of new channels along the 202 km route. By took a different approach and persuaded the government to adopt a ‘slackwater' system that raised the level of the water above the rapids and swamps thorough the use of tall dams. This created a practical route with the minimum of excavation. By also pressed for the canal to accommodate the then newly introduced steamships and this necessitated dams that were taller and wider than anything previously constructed in North America. Canal construction begun in 1828 and involved around 6,000 workers at multiple sites along the length of the canal. The whole length was navigable in 1832.
The choice of route for the Rideau Canal, and the use of a slack water canal design, were influenced by the underdeveloped nature of the country through which the canal was to pass. In many parts of Europe, for instance, owners of riverside agricultural land, water mills and fishing rights would have resisted the alteration in river levels required by such a system. Slackwater canals are easier to build, and require fewer workers. Therefore this method will be chosen instead of a more costly conventional canal where the environment allows, as was the case with the Rideau Canal.
As with many canals, the Rideau Canal seems to have formed a catalyst for development. Ottawa grew around the canal as it runs southward from the Ottawa River, and elsewhere towns sprung up on the canal's banks. This is typical of economic development associated with canals, and mirrors the development of towns following canal building elsewhere in the world.
The Rideau Canal has survived almost in its original condition as it was by-passed following the improvement in relations between Britain and the USA and the development of the much larger St Lawrence Seaway. Its military capacity was never put to the test. It now functions mainly as a waterway for leisure craft.