I found the following explanation on the Mudcat Cafe (an invaluable
online resource for explanations of obscure references in traditional
song lyrics):
Russell Ames gives us the lyrics and some info in The Story of
American Folk Song (Grosset & Dunlop, 1960, p, 179), as follows:
"The canal was opened in 1825, and by 1845 there were about four
thousand boats on it, employing some twenty-five thousand men, women,
and boys. One of the most widespread of their songs, "The Raging
Canal," pretended that the voyage along the ditch, originally four
deep, at a speed of about four miles an hour, was very dangerous. This
was the canaller's favotie joke."
And
"The Erie Canal, as originally constructed, was a completely flat,
shallow waterway. The barges were drawn along by mules. Thus, apart
from getting wet, storms posed little danger. As for needing a
distress signal, one could always step off onto dry land...."
http://www.mudcat.org/thread.cfm?threadid=38205&messages=5
Seems a little funnier now!
Fortunately for us, there are LOTS of English majors and historians
doing very close analyses of every scrap of Americana out there. Many
of the jokes may not seem funny now, but I doubt if there are many
references in these songs that are beyond our grasp.