Why would Democrats spend money on railroads and canals in the North? Or are you talking about Northern Democrats?
The answer is in your question: Democrats are Democrats, North or South, one scratches the other's back & visa versa.
In 1860 Democrats were an alliance of Southern slaveholders and Northern Big-City Immigrant bosses (i.e, Tammany Hall).
They supported each other, voted for each other's pet projects.
That's how Jefferson Davis was able to get Congress to vote (in today's values) about $65 billion to pay for the Gadsden Purchase to run the first transcontinental railroad near his own home.
The Land Grant Act of 1850 was passed by Democrat controlled Congress and used to help finance railroads all over the country, especially in the Mississippi valley, the Southern owned Mobile & Ohio Railroad.
So your whole idea that old-time Democrats were somehow more "conservative" and wanted less Federal spending is pure, unadulterated hogwash!
The real truth is that Democrats only ever wanted to reduce Federal spending when Republicans were in charge.
Once Democrats came to power, they spent like drunken sailors (no offense intended to drunken sailors!).