The pros are many. Firstly, it puts all the water being pumped out of the mines to use. The first major canal routes were fed water that was brought up by the pumping engines in the mines, water that before was either being diverted to lakes or used to all but drown local farm land.

It's a lot easier to move goods on water than over land. A horse that can pull 5 tonnes on land can pull up to 50 tonnes on the water. Which means you can transport more goods and make more money.

Canals were versatile, not just goods put also easy ways to move people. They small, usually, and it made tunnels easier to build as apposed to long, windy roads.

The cons, too, are many. They are expensive. Really expensive. And they take years to build. Not only this they are limiting. The Caledonian canal in scotland was built to decent width in the early 19th century, but once ships got bigger they couldnt use the water way. They're very difficult to widen

Zagreus9 is correct; a boat is almost frictionless at very slow speeds, and relatively cheap and easy to construct. For the pre-industrial world of the early 1800's, putting something big, heavy and bulky on a boat was the only practical way to move it. To be more specific about the alternatives; for the Erie Canal; they considered trying to make the Mohawk navigable, and building locks and canals where that was impossible. But that had been tried on the Potomac river in the 18th century, by the Potowmack Company- largely with the impetus of George Washington. It was discovered that the river was unreliable- sometimes it was at flood, sometimes too dry, sometimes frozen. Without year-round traffic, the company went broke. So the Erie planners decided to spend the great amount of money for an actual canal. The Erie turned out to be very profitable: wheat harvested in the midwest could be loaded onto boats, taken over the Great Lakes, over the Erie Canal, down the Hudson to New York and then from New York anywhere else on the east coast or beyond. The economic shift was big: the price of grain in New York dropped to a fraction of what it had been, and farms in New England began to be affected enough to go broke ( which Thoreau mistakenly thought, in his book Walden, the result of being too well-equipped). It set off a canal-building fad; the C&O Canal was quickly started, along the Potomac. But it had not been operating for long before it faced competition from the newly-invented railroad, and instead of tying to the Great Lakes it simply ended only a little ways beyond the Alleghenies in Cumberland, Maryland. Railroads are cheaper to maintain, and extend. Though it continued to operate into the early 20th century, the C&O never really became as lucrative as the Erie. The Erie continued to see plenty of traffic; a lot of the coal for New York City came through it, and it was widened and re-vamped a few times.

If you are selling canals to someone who's only got horses, and needs to move stuff like grain, coal or stone, it makes sense . If you're selling them to someone who knows about railroads, it's pretty hard.

Two good sources- Bernstein's Wedding of the Waters, for the Erie, and Kapsch's The Potomac Canal.

Not exactly a con, but there would be a business risk. Apart from the cost of construction, canals have significant operating expenses. The waterway, towpath and locks need to be maintained. In particular if you get erosion of the canal bank when it is elevated above the surrounding countryside, you can eventually get catastrophic failure where the bank breaks. Also vegetation has to be removed above and below the waterline, and in some cases the canal bed needs periodic re-lining. You probably would have needed lock-keepers as well. These costs have to be borne by the fees from traffic, which could only be estimated before the build.

Con: The Erie Canal served as a vector for the waterborne disease of cholera several times in its history, including (per link below) 1832, '34, and '49. Diary excerpt from one woman who traveled on the canal in 1834: http://www.archives.nysed.gov/projects/eriecanal/ec_questions1830_wilmer2.shtml

More info about Erie canal cholera, mentioning the years 1832 and '49, from what appears to be a talk given by Utica College's Deanna Hyney, "Evils of the Erie Canal" (see p. 105): http://www.utica.edu/academic/ssm/history/chapter%205%20Hiney.pdf