Question

Cities grew along railroads and canals because

the government designed the cities

workers could not live anywhere else

settlers could obtain cheap land nearby

there were not enough roads made of tar

Answer 1

That settlers could obtain cheap land nearby would be your answer. Also along the railroads and canals you get transportation

Answer 2

None of these is a good answer. The obvious answer is because railroads and canals both provide cheap transportation, and the best reason to have a city -- a concentration of population and wealth -- is to manage a transportation nexus, a place where different modes of transportation (typically land and sea) meet and exchange goods. This is why all of the ancient cities are on ports.

I suppose the least dumb answer is the last, which at least acknowledges the importance of transportation. The problem is that it is the things that drive on the roads -- cars and trucks -- that are important, not the roads themselves. Without a cheap reliable automobile, a tar road is useless, a silly expense.

By the way, it can't be that land was cheap nearby. In fact land is always more expensive near a railroad or canal or coast, because it's in higher demand.