William Penn, the founder of the Pennsylvania Colony, first suggested building a canal that would link the Susquehanna and Delaware valleys in 1690. Although the Union Canal was the first canal ever surveyed in the US, the survey wasn't begun until the years between 1762 and 1770. It was the discovery of anthracite coal in the upper Susquehanna Valley that spurred the project forward. Needing an efficient transport system for the coal, the Pennsylvania General Assembly hired the Delaware and Schuylkill Canal Company and the Schuylkill and Susquehanna Canal Company to work on the project. Construction was started in 1792 and the first shovel of soil was dug by President George Washington.
The Union Canal was designed to follow the Swatara Creek upstream from the small city of Middletown to Quittapahilla Creek after which point it went upstream again past Myerstown and Lebanon to the headwaters. It crossed overland at the headwaters of Tulpehocken Creek to Clarks Run. It then followed the Tulpehocken Creek downstream to Reading which was located on the Schuylkill River. The last leg followed the Schuylkill River down to the Delaware River ending at Philadelphia.
By 1793 the canal was well under construction with five locks in place between Lebanon and Myerstown but financial problems caused work on the project to cease. Two years later, in 1795, the Pennsylvania legislature voted on a lottery for canal fund raising purposes. The lottery awarded $33 million in prize money but only applied $270,000 to the canal building project. The two canal companies were reorganized into one company in 1811 and the company called the Union Canal Company of Pennsylvania resumed work on the canal in 1821. A major challenge to the builders was the construction of a tunnel that had to go through the ridge that separated the headwaters of Clarks Run and the Quittapahilla Creek. Although the tunnel was only 729 feet long, the drilling had to all be done by hand. Gunpowder was used to blast through the ridge and they were only able to complete 15 feet of the tunnel per week. It took over two full years to complete.
Operation of the canal
By the early 1840s the canal locks were becoming obsolete, being too narrow to allow the passage of the larger barges that were coming into more common use. A flood in 1862 damaged a large portion of the canal, which had been in decline for a number of years and by 1881, the canal closed.
The Union Canal Tunnel was purchased in April 1950 by the Lebanon County Historical Society for preservation as a National Historic Civil Engineering Landmark and in October of 1974 it was placed on the National Register of historic places. In 1994, it officially became a National Historic Landmark of the United States.