Leading the way was that entrepreneur par excellence, James Gray Bethune. Bethune had arrived in Cobourg sometime in about 1816. At first he dabbled in mills and things, but finally settled on running his general store in town, eventually combining the store with the post office and setting himself up as the first local cashier of the Bank of Upper Canada.

Bethune quickly saw that the key to the problem was Rice Lake. In the early 1830's it was still clear to everyone that water transport was the most efficient and cheapest way of moving goods and people around. By 1831 Cobourg's harbour development was well under way (more on Cobourg's Harbour). Port Hope's harbour was mired in political difficulties and the Trent River was virtually impossible to use because of the number of falls and rapids. If an overland passage could be arranged between Rice Lake and Cobourg, this would form a relatively short portage which would bring all the produce of the back country through Cobourg's harbour.

Unfortunately Rubidge didn't really know how to build a lock. First he misunderstood the actual low-water levels of the lakes involved. This is crucial. In order to have a proper lock it is necessary to have water at both ends. High-water levels are relatively easy to spot, but low-levels require a more prolonged survey. The bottom of the lower gate of any lock rests against a sill in order to resist the pressure of the water coming downstream. The workmen found that when the water was let out of the lock, the sill was high and dry above the lake below it. They also found that the rock in the area was so porous that when the lock was full the water simply seeped away into the ground.
The lock was useless and had to be redone. But now the money was gone too.

When the committee earlier allowed Bethune to take over the project they also failed to supervise the spending of the money. Bethune was the representative of the Bank of Upper Canada and was a fairly glad hand at lending money out for what he thought were worthy investments, a surprising number of which involved him or his relatives. So chaotic was his book-keeping that it soon became clear that no one could figure out what was his and what the bank's.
When in July of 1834 the bank inspectors were about to descend on Cobourg to have a look, it appears that Bethune attempted to stage a clumsy robbery of his own bank in order to buy time. Nothing was ever proven. but they did discover some 9,000 pounds were out in loans, a sum way beyond what the bank could authorize. Bethune was made responsible and frantically tried to sell everything he owned in order to raise the money. He failed. After an unsuccessful attempt to run for a seat in the legislature - which would have given him immunity - Bethune threw in the towel and, after a brief period in the local debtor's prison at Cobourg, he took off for Rochester where he died impoverished a few years later.

The first attempt to exploit the inland waterway was a complete failure, particularly since the settlers above the Bobcaygeon lock now had an utterly useless dam beside their pointless lock. Thus they couldn't even run the old rapids the way they did before.