The promoters were also betting on the amount of visitors to Niagara Falls visiting from Buffalo by train. All the train traffic had to follow the Canadian route because there was no steam railroads yet built on the American side. The Chippawa & Queenston Railway (Erie & Ontario Railroad) provided a direct link from Lake Erie to Lake Ontario.
The City of the Falls was very slow to grow and only a few of the lots were sold and fewer homes were built.
In 1836, steam railroads were completed on the American side. This diverted the much-anticipated traffic that the promoters of the new city were counting on. This proved to be a deathblow to the City of the Falls plan from which there was no recovery. The entire proposed enterprise had become too costly. The Company expected to make a profit and this simply did not occur.
Eventually the City of the Falls Company ran out of money.