The original Dutch settlers immediately recognized the value of the land between the convergence of Rondout Creek and the Hudson River, and established a small Indian trading post there in the 17th century. The village of Kingston, located a few miles away on a hill overlooking the Hudson, dominated the area during the 17th, 18th, and early 19th centuries. While Kingston played a prominent role in the American Revolution, Rondout remained completely obscure (and avoided the wrath of the British). A small unincorporated hamlet in 1776, a resident recalled Rondout as "scarcely more than six or seven dwelling houses, a mere dependency of the village of Kingston. One or two storehouses were erected on the banks of the creek, and from there grain and the various products of local farms were shipped to market."
Paralleling the increase in steamboat traffic, State governments and independent companies (receiving almost no aid from the Federal government) began building canals. One of the most ambitious programs proved to be New York's Erie Canal, constructed under the aggressive leadership of Governor DeWitt Clinton. Known derisively as "Clinton's Big Ditch" or the "Governor's Gutter," the Erie Canal was begun in 1817 and finished in 1825. The Erie Canal proved to be an economic giant; linking the emerging economies and material resources of the Great Lakes with the Hudson River, New York experienced huge benefits from the canal. Realizing the fortunes to be made from bringing the raw materials from the West (grain, timber, coal, iron, etc.,) to the huge cities of the American Northeast, Americans embarked upon a canal-building craze that would not end until the introduction of the railroads.
In the early 1820s, William and Maurice Wurts found themselves the owners of a series of anthracite coal mines in Carbondale, Pennsylvania. Seeking buyers for their coal, they found the nearby market of Philadelphia saturated with coal provided by the Lehigh and Delaware Canal. Searching for a new market, the Wurts looked for a cheap transportation route from their mines to New York City. Taking the lead from the new Erie Canal, they settled on the idea of a canal linking their mines to the Hudson River, and decided upon Rondout, New York for the terminus for their project, which they called the Delaware and Hudson Canal. Construction began the same year the Erie Canal was completed, in 1825, and Rondout began to feel the effects of the canal immediately.
From a tiny hamlet in the early 19th-century, Rondout grew quickly with the Delaware and Hudson Canal's help; by 1840, the village had a population of 1500, 200 houses, two churches, six hotels and taverns, 25 stores, three freighting companies, a tobacco factory, a gristmill, four boatyards, two dry docks, and the main offices of the Delaware and Hudson lined the banks of the Rondout Creek--Rondout was a bustling, booming river town. The growth continued and by 1855 the town had 6,000 residents, finally surpassing the village of nearby Kingston.
Kingston and Rondout, although distinct communities, were quite dependent upon each other. Kingston, the more established, though static, community possessed more of the banks and professional services, but Rondout, with its vigorous economy, had the industrial facilities and port connections to keep the area growing and competitive in the coming years. In the early 1870s, each town unsuccessfully tried to incorporate as an individual "city." In 1872, the two towns merged into one governmental unit. Rondout, the larger of the two, kept the balance of power by controlling five of the nine wards of the city, but Kingston retained its name.
With business brought by industry and transportation, the Kingston area, incorporating both Rondout and old-Kingston, profited enormously throughout the 19th century. In 1899, however, growth came to an abrubt halt when the Delaware and Hudson Canal closed. Finding it more economical for the company to ship its coal by rail, and as the demand for dependable, year-round supplies increased, the seasonal nature of canals became obsolete, and the Delaware and Hudson Canal became the Delaware and Hudson Railroad. Progress also dealt a blow to other industries--demand for local cement decreased as the faster drying Portland came into use, and so did the demand for the region's "bluestone." Shipping decreased with the decline of local industries, removing the need for shipbuilding and ship-repair industries. By 1932, only 30 years after Rondout was the primary port of the Mid-Hudson River Valley, only a few small industrial companies still operated in the river town. Transportation technologies helped Kingston prosper and made America's amazing Industrial Revolution possible. It is somewhat ironic that an early transportation technology of the Industrial Revolution, the railroad, brought about Rondout's decline.