In 1936 the State Canal Commission was appointed to further plans for a canal from this inlet [Budd Inlet, Olympia] to the Columbia River, through McCleary and by way of Grays and Willapa harbors. (pg 390)Washington, a guide to the Evergreen state, compiled by workers of the Writers' program of the Work projects administration in the state of Washington. Portland, Or., Binfords & Mort 
Report on proposed canals connecting Puget Sound--Grays Harbor, Grays Harbor--Willapa Bay and Willapa Bay--Columbia River, by the Canal Commission of the state of Washington, June 7, 1933 .. [Olympia, 1933]Skookum Inlet to Elma via Summit. This route would follow a valley they has been eroded in certain low lying masses of rock that occur between the Black Hills and the Olympics. The highest point on the line as surveyed is 420 feet above tide. For at least five miles the excavation for a canal would be in basalt. (pg 26)One of these alternate possibilities is a line running from Elma approximately up the Cloquallum River, crossing a divide at the head of that stream, thence down the easterly slope of the divide, and entering Puget Sound through Hammersly Inlet. Another possible alternative is a line running from Elma through McCleary, thence down the Kamilche into Skookum Inlet, or from McCleary crossing over to Kennedy Creek and thence into Totten Inlet on Puget Sound. (pg 32)
Although these alternative routes would have been shorter than the main proposed route of Chehalis - Black River, studies determined that a McCleary route would require tons more excavation and water - plus it would destroy the oyster industry at Skookum Inlet.
More on the main canal route proposed - Olympia, Black River, Chehalis River