On Nov. 15, 1885, the first train left San Diego on a trip over the Atchison, Topeka and Santa Fe tracks, which connected with eastbound transcontinental railroad lines. Six days later, the first westbound through-train brought 60 passengers to a San Diego celebration that wasnít at all dampened by pouring rain. At last, San Diego was connected to the transcontinental railroad network! With its natural harbor such an obvious place for South American and Asian countries to ship their goods and pick up American merchandise, San Diego envisioned itself as a major trade depot on the West Coast. Its citizens could taste the successóand richesóthat must be just around the corner.

In Hortonís Addition, also known as New Town, land values skyrocketed. Undeveloped lots soon were selling in other parts of the region, including an unincorporated area immediately to the east of San Diegoís boundary line. Entrepreneurs Abraham Klauber and Samuel Steiner purchased a tract of over 240 acres that sat 400 feet above sea level and commanded a view of the soon-to-be-busy harbor and even the Coronado Islands and Mexico beyond. With great hopes, they named the area ìCity Heightsî and one of its more elevated neighborhoods ìTeraltaî (High Ground). Then they set about to persuade San Diegans it was the coming place to settle.

The Park Belt Motor Line aided the process when it agreed to connect New Town San Diego (later known simply as downtown San Diego) to City Heights (known in legal papers as Steiner, Klauber, Choate & Castleís Addition). From Broadway, the tracks stretched up Sweitzer Canyon, through the area now occupied by the Balboa Park golf course, and up to University Avenue, then east to City Heights. An advertisement dating to July 1888 lauded this trolley route as ìthe most substantially built, the most expensive, picturesque and the cheapest ride of any motor road in San Diego.î Other advertisements of the period praised City Heights as a place for ìcheap homes, monthly payments, no interest.

The pace of subsequent land sales disappointed Klauber and Steiner. Winter rains across the San Diego County line in Riverside County washed out the railroadís tracks in 1890 near Temecula. The disaster cut San Diego off from the transcontinental railroad line. Surveying the damage, Atchison, Topeka and Santa Fe officials made a decision that caused the cityís bright hopes to plummet. They decided they would not rebuild the line. Instead, San Diego would be connected to the transcontinental railroad by a spur line from Los Angeles. That meant anyone who wanted to ship goods to or from San Diego would have to go through Los Angeles. Pessimism soon ran rampant. What point was there in even using San Diego, when Los Angeles was building, and improving upon, an artificial port of its own at San Pedro? And if San Diego did not have a future as a great trade depot, what future did it have? And what about City Heights? Was there really a point to having a community that boasted a view of a harbor while being denied the opportunity to live up to its potential?

However, as it is said, hope springs eternal. On May 4, 1904, the United States began construction of the Panama Canal, reviving San Diegoís trade dream on the basis of the fact that the city now would become the first important American port north of the canal. In 1905, entrepreneur John Spreckels began building the San Diego & Arizona Railroadóa determined effort to span the mountains, gorges and desert lying between San Diego and the desert of Imperial Valley to provide San Diego a direct line east to the transcontinental railroad lines.