What does diverted mean in the sentence?
Eventually, the western states diverted much of their produce from the rivers to the Erie Canal, a shorter route to eastern markets

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"Diverted" means to change direction. The sentence is merely stating that it was more economical for the Western States to change routes and go along the Erie Canal.

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You can also use "divert" in a more figureative sense.  For example, "My attention was diverted by the  loud noise outside".

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It means send in a new direction.

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