The canal system grew rapidly at first, and became an almost completely-connected network covering the South, Midlands, and parts of the North of England and Wales. There were canals in Scotland, but they were not connected to the English canals or, generally (the main exception being the Monkland Canal, the Union Canal and the Forth and Clyde Canal which connected the River Clyde and Glasgow to the River Forth and Edinburgh) to each other. As building techniques improved, older canals were improved by straightening, embankments, cuttings, tunnels, aqueducts, inclined planes, and boat lifts, which together snipped many miles and locks, and therefore, hours and cost, from journeys.
In the 1960s the infant canal leisure industry was only just sufficient to prevent the closure of the still-open canals, but then the pressure to maintain canals for leisure purposes increased. From the 1970s onwards, increasing numbers of closed canals were restored by enthusiast volunteers, and this continues today. The success of these projects has led to the funding and use of contractors to complete large restoration projects and complex civil engineering projects such as the restoration of the Victorian Anderton Boat Lift and the new Falkirk Wheel rotating lift. There are even plans to create new canals. It is said that there are more boats on the canals today than at the height of the use of canals for commercial purposes.
The transport system that existed before the canals were built consisted of either coastal shipping or horses and carts struggling along mostly un-surfaced mud roads (although there were some surfaced Turnpike roads). There was also a small amount of traffic carried along navigable rivers. In the 17th century, as early industry started to expand, this transport situation was highly unsatisfactory. The restrictions of coastal shipping and river transport were obvious and horses and carts could only carry one or two tons of cargo at a time. The poor state of most of the roads meant that they could often become unusable after heavy rain. Because of the small loads that could be carried, supply of essential commodities such as coal, and iron ore were limited, and this kept prices high and restricted economic growth. One horse-drawn canal barge could carry about thirty tonnes at a time, faster than road transport and at half the cost.
Some 29 river navigation improvements took place in the 16th and 17th centuries starting with the Thames locks and the River Wey Navigation. The 18th century saw the Aire & Calder Navigation (1703), the Kennet (1723), Bristol Avon (1727), the Mersey and Irwell (1725), the Calder & Hebble (1758). The net effect of these was to bring most of England, with the notable exceptions of Birmingham and Staffordshire, within of a waterway.
By the early 18th century, river navigations such as the Aire and Calder Navigation were becoming quite sophisticated, with pound locks and longer and longer "cuts" (some with intermediate locks) to avoid circuitous or difficult stretches of river. Eventually, the experience of building long multi-level cuts with their own locks gave rise to the idea of building a "pure" canal, a waterway designed on the basis of where goods needed to go, not where a river happened to be.
The claim for the first pure canal in the United Kingdom is debated between "Sankey" and "Bridgewater" supporters. Others say that neither of these deserve the title, and that other true canals such as the Newry Canal in Northern Ireland were constructed by Thomas Steers before the Industrial Revolution's 'canal mania'.
The canal boats could carry thirty tons at a time with only one horse pulling - more than ten times the amount of cargo per horse that was possible with a cart. Because of this huge increase in supply, the Bridgewater canal reduced the price of coal in Manchester by nearly two-thirds within just a year of its opening. The Bridgewater was also a huge financial success, with it earning what had been spent on its construction within just a few years.
The new canal system was both cause and effect of the rapid industrialisation of the British Midlands and north. The period between the 1770s and the 1830s is often referred to as the "Golden Age" of British canals.
For each canal, an Act of Parliament was necessary to authorise construction, and as people saw the high incomes achieved from canal tolls, canal proposals came to be put forward by investors interested in profiting from dividends, at least as much as by people whose businesses would profit from cheaper transport of raw materials and finished goods.
In a further development, there was often out and out speculation, where people would try to buy shares in a newly-floated company simply to sell them on for an immediate profit, regardless of whether the canal was ever profitable, or even built. During this period of "canal mania", huge sums were invested in canal building, and although many schemes came to nothing, the canal system rapidly expanded to nearly 4,000 miles (over 6,400 kilometres) in length, with essentially no external competition.
Many rival canal companies were formed, often competing bitterly. Perhaps the best example of the inefficiencies caused by these rivalries is Worcester Bar in Birmingham, a point where the Worcester and Birmingham Canal and the Birmingham Canal Navigations Main Line were only seven feet apart, with no technical reasons why the canals could not be connected. For many years, a dispute about tolls meant that goods travelling through Birmingham had to be transhipped from boats in one canal to boats in the other.
His next locks were wider. He built locks 72 feet 7 inches (22.1 m) long by 15 feet (4.6 m) wide when he extended the Bridgewater canal to Runcorn, where the canal's only locks lowered boats to the River Mersey.
The narrow locks on the Trent and Mersey limited the size of the boats (which came to be called narrowboats), and thus limited the quantity of the cargo they could carry to around thirty tonnes. This decision would in later years make the canal network economically uncompetitive for freight transport, and by the mid 20th century it was no longer possible to work a thirty tonne load economically.
The bulk of the canal system was built in the industrial Midlands and the north of England, where navigable rivers most needed extending and connecting, and heavy cargoes of manufactured goods, raw materials or coal most needed carrying. Most of the traffic on the canal network was internal. However the network linked with coastal port cities such as London, Liverpool, and Bristol, where cargo could be exchanged with sea going ships for import and export.
The great manufacturing cities of Manchester and Birmingham were major economic drivers for the 'canal mania' which reached its peak in 1793, and both benefited from a network of canals, most of which survive.
In the industrial conurbation of Birmingham and the Black Country. A dense network of nearly one hundred and sixty miles of canals, dubbed the Birmingham Canal Navigations (BCN) was constructed to serve the network of industries.
Manchester had a canal connection to the nearby port of Liverpool via the Leeds and Liverpool Canal. However,in the nineteenth century Manchester's merchants became dissatisfied with the poor service and high charges offered by the Liverpool docks, and the near monopoly of the railways. They decided to bypass the Liverpool monopoly on coastal trade by converting a section of the Irwell into the Manchester Ship Canal, which opened in 1894, turning Manchester into an inland port in its own right.
Birmingham's canals linked to the national network in several directions. To the north several several trunk cross-country canals, linking Birmingham to Manchester were constructed, including the Trent and Mersey and Shropshire Union Canal. The Coventry Canal, the Oxford Canal, and what is now the Grand Union Canal linked southwards to London. And to the south west, the Worcester & Birmingham and Staffordshire & Worcestershire canals linked to the River Severn.
The industrial revolution saw Yorkshire towns and cities such as Leeds, Sheffield, Bradford and Huddersfield develop large textile and coal mining industries, which required an efficient transport system. As early as the late 17th century, the Aire and Calder and Calder and Hebble navigations had been canalised, allowing navigation from Leeds to the River Humber, whereas the River Don Navigation connected Sheffield to the Humber.
Later in the 18th century, the Leeds and Liverpool Canal was constructed, creating an east-west link, giving access to the port at Liverpool allowing export of finished goods. The Rochdale and Huddersfield Broad and Narrow canals connected to Manchester.
The East Midlands cities of Nottingham and Leicester were connected to the national network via the canalised River Trent and River Soar, whilst Leicester, had a connection to London via the Grand Union Canal.
As early as 1790 London was linked to the national network via the River Thames and the Oxford Canal. A more direct route between London and the national canal network; the Grand Junction Canal opened in 1805.
A few self-contained canals, not connected to the national system, were built in Devon and Cornwall, such as the Bude Canal and the St. Columb Canal. The same was true for South Wales, with several isolated canals running along the South Wales Valleys. These included the Swansea Canal, the Neath and Tennant Canal, the Glamorganshire Canal and the Monmouthshire & Brecon Canal. Nearly all of these canals were constructed to serve local industries, and fell derelict when faced with competition from other modes of transport.
The boats used on canals were a mixed bunch, but on the narrow canals the wide narrowboat was the standard. On the broad canals they were joined by wider boats which often derived from the type used on connecting rivers. All boats on the canals were horsedrawn and either worked "fly" or "standard". Flyboats carried cargo and sometimes passengers at relatively high speed day and night. These boats were crewed by four men, who operated a watch system whereby two men worked while the other two slept. Horses were changed regularly. Standard working involved travelling largely in daylight hours, with crews swapping boats so as to sleep at home most nights. The boats were owned and operated by individual carriers, or by carrying companies who would pay the helmsman a wage depending on the distance travelled, and the amount of cargo.
Canal companies were unable to compete against the speed of the new railways, and in order to survive they had to slash their prices. This put an end to the huge profits that canal companies had enjoyed before the coming of the railways, and also had an effect on the boatmen who faced a big drop in wages. Flyboat working virtually ceased, as it could not compete with the railways on speed and the boatmen found they could only afford to keep their families by taking them with them on the boats. This became standard practice across the canal system, with in many cases families with several children living in tiny boat cabins, creating a considerable community of boat people. Though this community ostensibly had much in common with Gypsies both communities strongly resisted any such comparison, and surviving boat people feel deeply insulted if described as 'water gypsies'.
By the 1850s the railway system had become well established and the amount of cargo carried on the canals had fallen by nearly two-thirds, lost mostly to railway competition. In many cases struggling canal companies were bought out by railway companies. Sometimes this was a tactical move by railway companies to gain ground in their competitors' territory, but sometimes canal companies were bought out, either to close them down and remove competition or to build a railway on the line of the canal. A notable example of this is the Croydon Canal. Larger canal companies survived independently and were able to continue to make profits. The canals survived through the 19th century largely by occupying the niches in the transport market that the railways had missed, or by supplying local markets such as the coal-hungry factories and mills of the big cities.
Overall, the canals adapted to the appearance of railways and in 1900 the canal network differed little from its extent in 1830.
This canal modernisation never occurred on a large scale in the UK, partly because of the power of the railway companies who feared competition, and successfully blocked any attempt to modernise the canals. Thus almost uniquely in Europe, many of the UK's canals remain as they have been since the 18th and 19th century: mostly operated with narrowboats less than 7 feet (2.3 m) wide and 70 feet (23 m) long (although in parts of the country slightly larger canals were constructed, called 'broad' or 'wide' canals, which could take boats that were wide and long). A major exception to this stagnation was the Manchester Ship Canal, built in the 1890s using the existing River Irwell and River Mersey, to take ocean-going ships into the centre of Manchester via its neighbour Salford.
Most of the canal system and inland waterways were nationalised in 1948, along with the railways, under the British Transport Commission, whose subsidiary Docks and Inland Waterways Executive managed them into the 1950s. A report in 1955 by the British Transport Commission placed the canals in the UK into three categories according to their economic prospects; waterways to be developed, waterways to be retained, and waterways having insufficient commercial prospects to justify their retention for navigation. During the 1950s and 1960s freight transport on the canals declined rapidly in the face of mass road transport, and several more canals were abandoned during this period. Most of the traffic on the canals by this time was in coal delivered to waterside factories which had no other convenient access. In the 1950s and 60s these factories either switched to using other fuels, often because of the Clean Air Act of 1956, or closed completely. The last carrying contract, to a jam factory near London, ended in 1971.
Under the Transport Act of 1962, the canals were transferred in 1963 to the British Waterways Board (BWB), now British Waterways, and the railways to the British Railways Board (BRB). In the same year a remarkably harsh winter saw many boats frozen into their moorings, and unable to move for weeks at a time. This was one of the reasons given for the decision by BWB to formally cease their commercial carrying on the canals. By this time the canal network had shrunk to just two thousand miles (3,000 kilometres), half the size it was at its peak in the early 19th century. However, the basic network was still intact; many of the closures were of duplicate routes or branches.
British Waterways Board was required, under the Act, to keep Commercial Waterways, mainly in the north-east, fit for commercial use; and Cruising Waterways fit for cruising. However, these obligations were subject to the caveat of being by the most economical means. There was no requirement to maintain Remainder waterways or keep them in a navigable condition; they were to be treated in the most economic way possible, which could mean abandonment. British Waterways could also change the classification of an existing waterway. Parts, or all, of a Remainder Waterway canal could also be transferred to local authorities, etc; and this transfer could, as happened, allow roads and motorways to be built over them, mitigating the need to provide (expensive) accommodation bridges or aqueducts. The act also allowed local authorities to contribute to the upkeep of Remainder Waterways.
In the past few decades, waterway restoration organisations have returned many hundreds of miles of abandoned and remainder canals to use, and work is still ongoing to save many more. Many restoration projects have been led by local canal societies or trusts, who were initially formed to fight the closure of a remainder waterway or to save an abandoned canal from further decay. They now work with local authorities and landowners to develop restoration plans and secure funding. The physical work is sometimes done by contractors, sometimes by volunteers. In 1970 the Waterway Recovery Group was formed to co-ordinate volunteer efforts on canals and river navigations throughout the United Kingdom.
British Waterways has come to see the economic and social potential of canalside development, and moved from hostility towards restoration, through neutrality, towards a supportive stance. Whilst British Waterways is now broadly supportive of restoration, its official policy is that it will not take on support of newly restored navigations unless they come with a sufficient dowry to pay for their ongoing upkeep. In effect, this means either reclassifying the Remainder Waterway as a Cruising Waterway or entering into an agreement for another body to maintain the waterway.
There has also been a movement to redevelop canals in inner city areas, such as Birmingham, Manchester, Salford and Sheffield, which have both numerous waterways and urban blight. In these cities, waterways redevelopment provides a focus for successful commercial/residential developments such as Gas Street Basin in Birmingham, Castlefield Basin in Manchester, Salford Quays and Victoria Quays in Sheffield. However, these developments are sometimes controversial. In 2005 environmentalists complained that housing developments on London's waterways threatened the vitality of the canal system.