Governor DeWitt Clinton helped finance the Erie Canal primarily through state action after federal support was denied. Here’s how it unfolded:

• Federal funding was not forthcoming: Presidents Madison and others vetoed or refused federal support for internal improvements like the Erie Canal, leaving New York to find the money itself. This rejection helped spur a state-led solution.

• State authorization and bonds: In 1817 the New York State Legislature passed a canal act authorizing the project and giving authority to issue up to about $7 million in bonds to fund construction. This bond authorization was the key mechanism for financing the canal’s early development.

• Clinton’s leadership and political strategy: Clinton, as governor, organized an official commission, built broad political support, and championed the project despite initial ridicule. His persistent lobbying within the state legislature and his ability to present a credible plan helped secure the necessary legislative approval and bond authorization.

• Toll revenue and repayment: Once construction began and the canal opened to traffic, tolls and the canal’s profitability quickly paid off much of the debt, demonstrating the financial viability of the project and justifying the initial bond funding in retrospect.

Direct answer: New York funded the Erie Canal with state-issued bonds authorized by the legislature in 1817, after federal funding was refused. Governor DeWitt Clinton led the charge, secured legislative approval through a Canal Act, and leveraged his political leadership to gather support for bonding the project. The resulting tolls from canal traffic eventually covered the debt and turned the canal into a profitable public works venture.