New forms of transportation are the makers and breakers of cities. The Erie Canal, which opened in 1825, connected farmers and tradespeople in the mid-west and along the canal in upstate New York to national and international markets via New York City. Towns along the canal, like Syracuse and Buffalo, were beneficiaries of their location and grew rapidly following its completion.
Although canals were a major step in connecting the nation, they did not operate during the freezing winter. Steam-driven railroads soon followed and often supplanted them. Like canals and rivers before them, railroads created prosperity along their routes. Cities competed to be a stopping point.
A classic example is the competition between St. Louis and Chicago. From its perch on the Mississippi River, St. Louis dominated trade down to New Orleans. In contrast, Chicago built rail connections across the Mississippi, providing year-round transportation that was more reliable. Chicago's rail and commercial connections to New York enabled it to dominate trade between East and West. Although St. Louis and other "gateway cities" thrived, Chicago towered above them all.
Control of the nation's railroads meant unprecedented wealth and power. During the Gilded Age, unregulated capitalism flourished, bringing unprecedented power to railroad owners like Jay Gould and Cornelius Vanderbilt.
In the 1880s and 1890s, farmers in the Midwest and South protested against railroad monopolies that charged high rates and controlled their lives from afar. This Populist movement challenged the power of the railroads and laid the groundwork for their restructuring and regulation beginning with the establishment of the Interstate Commerce Commission in 1887.