Amos, that's actually a lumbering song from the Adirondack Mt region of NY, and there are at least a few threads here about it.

Ed, I do know of one British Isles ballad - Johnny Troy - that is documented as having been a favorite of the Irish workers during the digging of the Erie Canal, however, the subject matter of the song has nothing to do with working on the canal. I have an interesting version from NYS that may have direct roots to the version sung on the Erie during the early 1800's...if you're interested, let me know.