The Union of Canada East and West in 1841 brought renewed interest in the proposed canal system linking Lake Ontario and Georgian Bay. The Government set up a Board of Works to assume responsibility for the partially built locks, dams and canals that were abandoned when the Rebellions broke out. Engineer Henry Hamilton Killaly, after an inspection tour, recommended only partial completion of the unfinished works, believing the Great Lakes-St. Lawrence River was the preferred route for the colony's future prosperity. Instead of the grand canal scheme, he recommended a combination of locks and plank roads for settlers heading north to the townships around the Kawartha Lakes and timber slides for the squared logs and lumber going south. There were strong protests from residents in the areas affected and a petition from Peterborough echoed these sentiments; “persons possessed of capital settled in the back townships . . . induced solely by the prospects of the opening of navigation . . . they will be compelled to abandon their property at a heavy loss . . . unless this outlet be afforded for their marketable produce.” Such pleas failed to induce a change in the limited scope of work proposed. Only those locks at Peterborough, Lindsay, Hastings and Glen Ross were completed.

As part of this scaled down rebuilding program, the lock at Bobcaygeon, which had proved of limited use, was rebuilt to accommodate the increased traffic through the Kawartha Lakes. A new masonry lock 134 feet long and 33 feet wide with a lift of 7 feet replaced the old wooden lock. A timber slide was added to the wooden crib dam.
These changes improved navigation from Sturgeon to Pigeon Lake, but disrupted the milling activities of Mossom Boyd. An enterprising Irishman, Boyd had moved to the Bobcaygeon area in the 1830s and worked in the milling establishment of founder Thomas Need. In the 1850s he bought out Need's interests, including the saw mill on the north side of the lower lock entrance. Changes to the lock disrupted the flumes bringing water to the mills and Boyd successfully lobbied the government for a new stone arched culvert and basin for his saw and grist mill. He also received £350 in compensation for lost production time while the new lock was being built.
The 1850s were a period of economic prosperity and a Reciprocity Treaty with the United States in 1854 greatly benefited Boyd's milling activities. The sawmill operations were so extensive they began to interfere with navigation. Sawdust in the lower reach, logs in the lock and the heavy use of water from the channel hindered navigation and damaged the locks. To solve this, the government negotiated a land swap with Boyd in 1874. In return for his land along the canal, the Crown gave Boyd property on Little Bob channel for his saw mill and gave him exclusive use of the surplus water for his grist mill. Mossom Boyd's death in 1883 marked the end of an impressive era of development in the community that had been linked closely to the development of the lock.