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The canal was conceived as a way to stimulate agricultural development in Hampshire. Following a Parliamentary Bill in 1778, construction began in that same year and was completed on 4th September 1794. One of the main cargos carried from Basingstoke was timber.
The canal was never a commercial success and fell into disuse even before the construction of the London and South Western Railway, which runs parallel to the canal along much of its length.
Commercial use ended in 1910 but low-level use of the canal continued.
In 1913 Mr A.J.Harmsworth tried to navigate the canal in a boat called Basingstoke. The journey was motivated by a desire to keep the canal open since the Canal Act of 1778 specified that if the canal was not used for 5 years then the land the canal was built on would be returned to the original owners. It is thought that it proved impossible to navigate the entire canal but despite this the canal was not abandoned.
During World War I the Royal Engineers took over the running of the canal and used it to transport supplies from Woolwich. The canal was also used to train soldiers in boat handling.
Mr A.J.Harmsworth latter purchased the canal (in 1922) and ran a number of boats on it for a mixture of limited commercial carrying and pleasure cruising.
The canal was sold upon his death in 1947 and by 1950 was in the hands of the New Basingstoke Canal Co Ltd. This company did not maintain the canal and by the mid-'60s it was essentially derelict.
In 1966, the Surrey and Hampshire Canal Society was formed by a group of local canal enthusiasts, with a view to reopening the derelict canal.
They were instrumental in running a campaign that culminated in 1976 with the compulsory purchase of the canal by the County Councils of Hampshire and Surrey.
In February 1977 a job creation project started with the aim of carrying out restoration work on the Deepcut flight of locks. The work was coordinated with the work of the canal society who organised work parties at week ends while the job creation teem worked on weekdays.
After about 18 years of restoration, 32 miles of the canal were formally re-opened on 10th May 1991.
The western section from North Warnborough to Basingstoke remains un-navigable from the point at which it enters the Greywell Tunnel. The tunnel is partially collapsed and is inhabited by a protected bat colony making it unlikely that the tunnel will ever be restored.
The canal is now managed by the Basingstoke Canal Authority and is open to navigation, but access is usually restricted due to the very limited water supply and the fact that most of the canal has been designated a Site of Special Scientific Interest (SSSI).
There is an information centre for the canal at Mytchett.