The rural economy had its troubles long before the 1860s: look at the history of the Corn Laws. And did Chicago beef really travel by the Erie Canal or by railroad?
Beef travelled by both - the railway cars were also refrigerated (I believe the last wooden style ice cars were decommissioned post WWII!)
But transport by water is roughly two orders of magnitude cheaper than (pre railway) land transport - see also acoup.blog on Land Trains and game of thrones for a interesting segue.
