As the American economy developed in the early nineteenth century- -particularly during the Jacksonian Era (named for Andrew Jackson, president in the 1830s)- -transportation improvements played a crucial role, with the construction of better roads, the creation of the first railroad lines, and the digging of canals. Of all these developments, the Erie Canal had the greatest immediate impact because it provided the first all-water route directly connecting the Great Lakes and the rapidly growing Midwest to the major eastern seaport at New York City. The canal proved SO successful that it set off a wave of canal building across the country; cities like Baltimore and Philadelphia and states from Virginia to Illinois eagerly sought to imitate New York and tap into the profitable trade that was flowing between its cities of Buffalo and Troy and down the Hudson River to New York City.

The Erie Canal not only carried manufactured goods westward and transported western produce eastward; it also became the passageway for thousands of native-born white Americans and European immigrants into the upper reaches of New York and Pennsylvania and, beyond that, into the burgeoning midwestern states of Ohio, Indiana, Illinois, and Michigan. Along its course, boomtowns like Utica, Syracuse, and Rochester (cities in the state of New York) sprang up to supply the great migration and take advantage of the growing trade that flowed back and forth along its heavily traveled canal towpaths. As New York's success invited emulation, members of Congress and the Jackson administration were sent many requests for federal funding to help build roads, canals, and railroads in other parts of the country. Most of these requests were turned down with the reminder that New York had constructed its canal system with its own state funds.

The canal craze slowed appreciably by the late 1830s. Canals were costly to build ($20,000-$30,000 per mile and upward) and maintain. Both winter weather and recurrent flood damage interrupted the flow of traffic. Financial returns were inadequate. Most significant of all, steam-powered railroads appeared just a few years after the canals. When boom times ended with the Panic of 1837, followed by six years of economic depression, Pennsylvania and Indiana stood virtually bankrupt, while states like Ohio found themselves in financial difficulty because of their overextended investments in canal building. The canal boom halted around 1840, by which time the United States had built 3,326 miles of canals at a cost of roughly $125 million, or $37 ,580 per mile. Railroad construction, by contrast, had already reached 3,328 miles at an average Cost of $17,000 per mile. Although most lines existed in the Northeast, railroads could be found in all parts of the country by the 1840s, and no end was in sight. By then, no one questioned that the "iron horse" represented the wave of the future.

In addition to costing less to build,rail lines could serve areas that could not be reached by boats or barges in either the drought of summer or the freezing of winter. And although canals and steamboats could ship goods more cheaply railroads provided much faster service. Whereas horse- and mule-drawn freight wagons and canal boats averaged around two miles an hour, freight trains and steamboats averaged around twelve. More important,because railroads,unlike steamboats and canals,could be built more directly from one geographic point to another, they saved even more time than their travelling speeds suggest. During the 1850s,for example,a trip from Cincinnati to New York City by (horse-drawn)freight wagon could take forty to fifty days or more, depending on weather conditions. The same goods shipped downriver by steamboat to New Orleans and then by packet ship to New York required twenty-eight days, while those shipped on the Ohio canal system across Lake Erie to the Erie Canal and down the Hudson took eighteen. Railroads, by contrast, required only six to eight days, thus cutting the time by more than half that of their closest waterborne competitors.