Pierre Francois Xavier de Charlevoix, a French Jesuit, reported as early as 1721 that the land at the confluence of the Mississippi and Ohio Rivers would be a strategic location for settlement and fortification. Nearly a century later, in 1818, the Illinois territorial legislature incorporated the city and the Bank of Cairo. But Cairo was then only a paper city, and plans for its development came to a standstill with the death of John Gleaves Comegys, the leading promoter of the corporation.
The area's commercial potential again captured the imagination of Illinois leaders and eastern investors in the 1830's. New city promoters incorporated the Cairo City and Canal Company and made elaborate plans for levees, canals, factories, and warehouses. The first levees failed to hold back the rampaging rivers, and financial difficulties slowed the commercial boom. Company policy to lease, not sell, city lots also retarded expansion. With the first sale of lots in 1853 and the completion of the Illinois Central Railroad from Chicago to Cairo late in 1854, the city began to prosper.
When the Civil War began, both Northern and Southern strategists recognized the military importance of Cairo. On April 22, 1861, ten days after the bombardment of Fort Sumter, troops arrived to hold Cairo for the Union. They established camps on the land south of Cairo, and the city flourished as a troop and supply center for General Ulysses S. Grant's army. Although the city bustled with wartime activity, non-military commerce was reoriented along east-west lines.