The growth of San Diego now began in earnest, and Van Dyke wrote:

... by the end of 1885 its future was believed to be plainly assured. A very few who predicted a population of 50,000 in five years were looked upon as wild, even by those who believed most firmly in its future. Even those who knew best the amount of land behind it and the great water resources of its high mountains in the interior believed that 25,000 in five years would be doing well.

Not so optimistic was Harrison Gray Otis, who visited San Diego to describe its boom for the Los Angeles Times.

She has got it and is holding on to it with the tenacity of death and the tax collector. I hear of a score of men who have made their "pile" within a twelve-month, and I know that a score more are pursuing the eagle on Uncle Sam's twenties with a fierceness of energy that caused that bird o' freedom to scream a wild and despairing scream...this is peculiarly a San Diego pursuit; you never see anything of the sort in Los Angeles, where the populace take care of the noble bird and encourage him to increase and multiply ...

While not as successful as had been anticipated, the lighting of the town with electric carbon arc lamps on a half dozen 110-foot high masts cast a glow that matched the optimism of the day. Life grew gayer, if less sedate. Sunday buggy riding through the town became the fashion. The City Guard Band gave a concert each Saturday night in Horton's Plaza. The Birch and Cotton Minstrels came to town, paraded through the streets, and performed in the Leach Opera House before the largest audience ever assembled in it. Enthusiasm recognized no geographical limitations. The area of the Florence Hotel, on Fir Street between Third and Fourth Streets, was being described as San Diego's "Nob Hill." On July 4, the California Southern Railroad's Cannonball arrived two hours late with 400 passengers and the drum corps of the Los Angeles Turnverein Society which marched in uniform to Mayrhofer's Beer Garden where they joined the City Guard Band in celebrating Independence Day. They all sang to the music of the San Diego Coach Whip Waltz-Quadrille String Band.

Hotels and rooming houses rapidly filled and The San Diego Union warned:

The transient population of our city is so large that notwithstanding our many good hotels, an unwary stranger who neglects to engage a room immediately on his arrival here is often compelled to sit in a chair through the night for want of a bed.

Rowdyism became more prevalent and the enforcement of the laws more difficult as well as neglected. There were at least sixty saloons, ten opening within eight days, and as many of them were the scenes of nightly brawling, the City Trustees raised the license fee from $200 to $600 a year and required them to close at 11 o'clock at night. Thievery and burglaries increased. "Missiles" were thrown at performers in the Leach Opera House.

The gamblers and the boomers followed the speculators who had followed the settlers. Van Dyke wrote of the boomers:

The business of this class is to follow up all lines of rapid settlement, chop up good farming land into townlets 25 or 30 years ahead of the time they are needed, and sell off in the excitement enough to pay for the land and have a handsome profit left over. The boomer came from Kansas City, Wichita, Chicago, Milwaukee, Minnesota, New York, Seattle and everywhere, and with the aid of a brass band and free lunch (which had a marvelous influence on the human pocket) he began his work. Most of them were in Los Angeles but a few found their way to San Diego, to leaven up the whole lump.

By mid-1886 several thousand persons were arriving in San Diego monthly by train and ship. Seeking speculative markets, outside capital reached into the county. Land speculators boarded incoming trains at Oceanside, offering land in that area at "bargain prices," or at any place else. The Escondido Land and Town Company subdivided Rancho Rincón del Diablo into small farms and laid out another townsite. A syndicate organized the Santa Maria Land & Water Company and acquired 3200 acres for a townsite in the Santa Maria Valley and named it Ramona, after the novel of Helen Hunt Jackson. A townsite was laid out in El Cajon Valley by the El Cajon Valley Company, of which Ephraim Morse was a principal figure. A second hotel, the Corona, had an observation tower from which prospective buyers could select their lands. The Pacific Coast Land Bureau loaded fifteen carriages and coaches with prospective buyers and took them to see the beauties of the valley. Lots were sold in a spirited auction. The El Cajon Valley Company also laid out the inland town of Lakeside and construction of a hotel there was begun. A few houses and stores appeared at the site of the present town of Encinitas. The lands of nearby Los Vallecitos de San Marcos were opened and another town, San Marcos, got its start. Lots were offered on the installment plan near the railroad depot at the foot of Twenty-second Street. Jacob S. Taylor, a Texas cattle man, was erecting a hotel at Del Mar which, it was noted, was becoming a popular health resort.

Frank Terrill Botsford and George W. Heald bought a large part of the La Jolla area, subdivided it, and scheduled a public auction under the auspices of the Pacific Coast Land Bureau. It was to have its own hotel. The auctioneer, Wendell Eaton, told the eager customers about the future of "La Jolla Park:"

This is the natural watering place of this whole Southern country, and nothing can turn the tide from it. It is simply nature working... today the property is as free as air, and you can buy it at your own price.

Rancho Peñasquitos, the first of the Spanish grants, was offered in tracts of ten acres for $250 each, with the added attraction of a lottery. Purchasers were to select their lots and put their names in a hat for a drawing. Winners were to be awarded some specific improvement on their property or a choice of another lot or house on the ranch or one in Del Mar. One prize was listed as the $25,000 Peñasquitos ranch house being used as a hotel.

Van Dyke, the most descriptive of the writers of the period, recorded how the boom became a fever and all reason cast aside:

Speculation in city lots, which soon went beyond the scope of moderate resources in money and skill, found avenues to the country; and for twenty miles about the town the mesas and valleys were checkered with this or that man's "Addition to San Diego." Numberless new townsites were nearly inaccessible; one was at the bottom of a river; two extended into the bay. Some of the best had graded streets and young trees. All were sustained in the market by the promise of future hotels, sanitariums, opera houses, soldiers' homes, or motor lines to be built at specified dates. Few people visited these additions to see what they were asked to invest in, but under the stimulus of band music and a free lunch, they bought from the auctioneer's map and made large payments down. In this way at least a quarter of a million dollars were thrown away upon alkali wastes, cobble-stone tracts, sand-overflowed lands and cactus, the poorest land being usually put down on the townsite market.

San Diego now had eight hotels with accommodations for 1110 persons, Dr. P.C. Remondino's St. James, formerly the Santa Rosa, being the largest with 160 rooms. There were ten rooming houses and each could accommodate from thirty to 125 persons. Hotel rates were $1 to $4 a day and meals cost from 25 cents to $1. By midsummer of 1887 the Chamber of Commerce reported that 41,356 persons had arrived and 18,155 had departed in the fiscal year from June 30, 1886, to July 1, 1887. Passenger arrivals by train alone had risen from 2313 in July, 1886, to 4755 in June, 1887.

One day in July the pleasure schooner Lurline slipped into the harbor and aboard her was the master and owner, John D. Spreckels, who was a son of Claus Spreckels, the "Sugar King" of San Francisco. Claus Spreckels had fled a revolutionary Germany, landed in New York with no knowledge of the language and no money, and had gone on to make a fortune. John D. was one of three sons and already he had established himself in his father's company and in related businesses. San Diego meant little to him at the time, but on this casual visit he walked the streets, talked with the town's leaders, and felt the exhilarating surge of the incoming tide of people. He agreed to a suggestion that he accept a franchise to build a wharf which was needed to handle coal for the California Southern trains. His promise went no further than that. But the name of "Spreckels" already was on many lips on both coasts and speculators were alert to its possibilities.

A headline in The San Diego Union of September 2, 1887, reported a "Great Panic" in New York, and that depots, ticket offices and steamships had been "seized" by immigrants:

The greatest excitement ever known in this city has been prevailing for the last twenty-four hours. Men gathered in crowds upon the streets talking in frantic manner, in front of a broker's office in Wall Street. Six mounted policemen were sent for, and with great difficulty made room for carriages to pass. Crowds gathered around all the principal hotels. Express wagons, loaded with trunks, rushed through the streets to the Union Depot. All available vehicles have been pressed into service to convey the fleeing populace.

The cause of all this "terrible panic" was credited to a letter received by a Wall Street broker from a source in San Diego. The letter stated that J.D. Spreckels, the great "Sugar King" of the Sandwich Islands, had recently made arrangements to have a steamship line connect at San Diego with the railroad, for mail, freight and passenger transportation to New York, that a large wharf franchise had been secured, and "in a very short time it was expected that his ships, laden with the products of foreign countries, would cast anchor in San Diego Bay."

According to The San Diego Union's report, the letter also disclosed that the Southern Pacific Railroad was making efforts to extend its line to San Diego and that the San Diego and Lower California Railroad had sold its bonds in the East and the road soon would be running trains through Tia Juana City, "the only mountain pass into Lower California." Tia Juana City was the subdivision laid out in the Tia Juana Valley and which drew its name from the old settlement known as Tijuan which straddled both sides of the international border. The original name is believed to have been of Indian origin, meaning, "By the Sea." The report continued:

Most of the farsighted and shrewdest speculators have concluded that better opportunities are offered in the growing city of San Diego than there are in New York, and consequently,...they are leaving this city on every train for the metropolis of the Southwest.

A few days later the trap was sprung. A bulletin reported that a committee of the New York Stock Exchange had asked that all lots for sale in Tia Juana City be taken off the market "and we will take them all at the price offered." However, The San Diego Union reassured its readers that a reporter had called on the agents for the land, Hart & Stern, and they stated that before complying with the request they intended to give all of their friends in San Diego a chance to buy. Lots worth $70,000 were sold in a few days to "friends."

Their money evidently purchased lots in a land of plenty, as specified in the advertisements:

Tia Juana has oranges of finer flavor than those of Cyprus, rustling corn equal to that of Illinois, lemons superior to those of Italy, figs more delicious than those of Smyrna, grapes more luscious than those of Portugal, olives equal to those of Italy, vines like those that creep and trail along the castled Rhine, peaches like those of Delaware, finer pears than can be found in Maryland, apples not inferior to those of New England, prunes unequaled in any land, vegetables to which for size and quality, Southern California only can lay claim.

The town soon acquired a drug store, boot shop, several grocery stores, a land office, a hotel and saloon, and a federal customs house.

John D. Spreckels also purchased the interest of W.W. Story in the Coronado Beach Company and thus, perhaps more than he had ever intended, found himself drawn into a situation where, as Alonzo Horton before him, he soon would be instrumental in shaping a community. Horton built a town and Spreckels would make it a city.

The lower bay area had a strong attraction for speculators, as the lands had been subjected to general "jumping" as the result of the rejection by the United States government of the claim of the family of Don Santiago Arguello to all the territory between the tip of the bay and the Mexican border. One of the principal promotions was a town named Oneonta, which was to remain a name on the map, lying just south of the present Imperial Beach and north of the Tia Juana River. "Oneonta" is a Mohawk Indian name of a town in New York State and was imported from there by settlers. Oneonta, it seems, had everything. Promotion material stated that it was the Pasadena of San Diego County and that those "living in and adjoining Oneonta have been cured of catarrh, rheumatism, lung, throat, and other diseases, and unitedly testify that every one, without a single exception, living there for any considerable time, has been restored to perfect health." The honor of having the "Pasadena of San Diego County" also was claimed by the San Diego Development Company for its subdivision, La Mesa, lying east of San Diego.

The new community of Otay, south of Chula Vista, was one of the largest of the boom promotions and acquired a factory, the Otay Watch Works, around which future development was to take place. Largely financed by Frank Kimball, it even manufactured some watches. The Babcock organization also promoted South Coronado and Coronado Heights.

Don Antonio Arguello, son of Santiago Arguello, also subdivided 26,000 acres of the huge Mexican ranch the family had retained, just below the international border, into town lots and five-acre tracts and laid out another town. The speculation in land in Mexico was not confined to that near the border. In 1883 the Mexican Congress passed the Law of Colonization, which provided that colonization companies surveying land in Lower California should have one-third of all they surveyed and the right to purchase the other two-thirds at 10 cents per hectare (one hectare equals 2.471 acres), and before 1888 some thirty concessions were granted. Four companies, however, managed to gain control of 7,642,543 hectares of land, or approximately four-fifths of the entire peninsula. A firm named Hansbury and Garvey, the San Diego agent for the International Company of Mexico, was advertising that it had 18,000,000 acres for sale in Lower California. Steamers and overland stages were leaving San Diego loaded daily for Ensenada and returning empty. The International Company was building a hotel at Ensenada and purchased horses, buggies, carriages and wagons in San Diego to be sent there to haul purchasers out to the tracts. Tents and bedding were sent down to provide for them until the hotel could be completed.

The Chamber of Commerce Report of 1887 recorded glowing civic progress and the rapid development of local transportation:

Two years ago the present city of San Diego was a quiet, inactive village. The one short local line of railway had been almost destroyed and inoperative by reason of floods for a year past. Communication with the outside world was to be obtained only by steamship and a miserable stage service. The local road was not only rebuilt, but San Diego was made the Pacific coast terminus of the great Santa Fe transcontinental line of railway. Now began an era of progress and development unprecedented in the history of California.

The ungraded streets were leveled to beautiful driveways; electric lights provided for the city and private consumers; street railways started; new lines of steam ships put on to accommodate the increasing commerce; new manufactories, while the capacities of the old ones were more than doubled; motor and electric railroads, communicating with the progressive suburbs fast springing into existence; magnificent business blocks, costing from $20,000 to $75,000; Coronado Beach, with its $2,000,000 worth of improvements, sprang up like an Aladdin lamp scene in less than a year; new water and gas pipes laid down and extended; a city increased from a population of 4000 to that of 20,000, and brimming over with business enterprise and liberality.

Such is the history of the city within the past two years. Its unquestioned excellence of climate and its peculiar commercial advantages has drawn the attention of business from all parts of the union to it. The settling and development of the interior part of the county is also going ahead rapidly. It is now traversed by two steam broad-gauge railroads, with two now building, another one to be commenced shortly by the Southern Pacific, and all to terminate upon the Bay of San Diego.

The National City and Otay Railway Company, owned by the Land & Town Company, built twenty-nine miles of road, including the main line from Fifth and L Streets in San Diego to National City, Chula Vista and Oneonta, with branch lines to La Presa, Sweetwater Dam and Tia Juana. It used steam "dummies," little boxlike steam engines, to pull passenger cars. The Coronado Railroad Company used steam dummies and one full-sized steam engine on the Coronado Belt Line that ran from Fifth and L Streets in San Diego, around the bay shore through National City, and up the Silver Strand and along the east side of Coronado Island to the ferry terminal. At the height of the boom the Coronado Belt Line and the National City and Otay Railroad ran a total of 104 trains a day.

The Ocean Beach Motor Railway began running steam cars from Roseville to Ocean Beach through the cleft on Point Loma that some day would become a freeway. The San Diego, Old Town and Pacific Beach Railroad, a subsidiary of the Electric Rapid Transit Company, began existence as an electric streetcar line, using an overhead power line, one of the first in the United States. It ran down Kettner to Old Town where it cut diagonally across the historic Plaza. The electrical equipment was soon removed and it operated as a steam power line and the tracks were extended to Grand Avenue and then westward to Pacific Beach and eventually to La Jolla. A horse track was built where the line turned from its northerly course onto Grand Avenue.

On April 15, 1886, a group led by Babcock and Story had organized the city's first transit system, the San Diego Street Car Company and the first mule-drawn cars began running on July 3, from the ferry landing to D Street and up D to Fifth. Construction continued until eight and a half miles of tracks had been laid and cars were serving most of the business and residential area, from the bay east as far as Thirty-first Street on National Avenue. The Coronado Beach Railway soon extended its horse-car line from the hotel to a racetrack at the Spanish Bight, the inlet between Coronado and North Island, and later to the extreme tip of North Island to haul rock for the construction of Zuniga Shoal Jetty. It soon switched to the little steam "dummies." Another line organized by Babcock and Story and using steam power was the University Heights Motor Road, called the Park Belt Line, which ran from Eighteenth and A Streets up Switzer Canyon across the southeast section of Balboa Park land and came up onto the mesa, or University Heights, at Marlborough Street and University Avenue, and then turned west to Fifth and down Fifth to Fir, to connect with the San Diego Street Car Company's system.

The electrical equipment was shifted from the Old Town line and used on a route that ran north from the foot of Fourth Street to University Avenue and then east to Normal Street, ending at the present E1 Cajon Boulevard. The electric cars were two-unit trains using power to pull a passenger car, though there was space for some passengers in the power unit. Service frequently was interrupted by power failures.

The line between Roseville and Ocean Beach was built by William H. Carlson, an enterprising young politician who had got his start as a page boy in the State Legislature. He joined Albert E. Higgins of San Diego in laying out a new town at Ocean Beach, which was then known as "The Mussel Beds." Prospective customers, after being ferried by steam launch across the bay, were taken in style to the Cliff House erected in Ocean Beach. A flood tide of cash set in and on the first of each month the happy promoters raised the prices of the lots ten percent, and perhaps several hundred were sold for as much as $300 each. A single auction in another new beach community, Pacific Beach, on the north side of Mission, or False Bay, resulted in sales amounting to,$200,000.

Carlson had borrowed a steam engine from the Pacific Coast Steamship Company, which operated a line for its wharf, to haul passengers over his line, but when he neglected to pay for its rental the company sent a crew out to rip up and store his tracks for security. A feeder railroad line for the California Southern, known as the San Diego Central Railroad Company, was building a line through the backcountry, where so much land speculating was going on, from Oceanside by way of Escondido, Bernardo, Poway and El Cajon to San Diego. Service on the twenty-one mile section between Oceanside Junction and Escondido was started on December 31, 1887.

The California Central was building a branch line down the coast from Los Angeles by way of Santa Ana as part of the Santa Fe system to connect with the California Southern near Oceanside, "which will bring Los Angeles within four hours of San Diego Harbor." This was a fateful move in the destiny of San Diego in view of the serious difficulties still being encountered in trying to keep the railroad line open through Temecula Canyon. There was no one to reflect on its implications amid the cries of the auctioneer and the din of the builders' hammers.

The San Diego, Elsinore and Pomona Valley Railway also was under construction from its northern point, crossing an inland empire and pointing hopefully toward the harbor of San Diego. The San Diego, Cuyamaca and Eastern Railroad was organized and was surveying the backcountry for a proposed line through El Cajon Valley, thence by way of Santa Maria Valley to Warner's Ranch, a route rejected many years before by United States Army engineers. At Warner's it was to proceed down San Felipe Pass and cross the desert to intersect the Southern Pacific. Then it was to turn northeast to also meet the tracks of the Santa Fe, or the Atlantic and Pacific as it was known along its western section. Mexican interests were planning a line down the peninsula from San Diego to San Quintin Bay, with a branch to Yuma, thus giving San Diego another outlet to the East.

The principal organizer of the Cuyamaca Railroad was Robert W. Waterman, the governor of California from 1887 to 1891, and he also purchased the Cuyamaca Rancho and reopened the Stonewall mine. In 1888 two new and apparently rich mines were opened, the Gold Queen and the Gold King, about four miles southeast of Julian, and this promptly resulted in the reopening of mines at both Julian and Banner, in particular the Owens and the Helvetia. Gold deposits also were worked near Mesa Grande, east of Santa Ysabel, and at Escondido. The Dulzura District in the Otay Mountains, not far from the Mexican border, also yielded small amounts of gold.

Even the desert was not spared. The Hon. William Williams of Indiana made a speech in the Plaza and called for the irrigation of the desert to make it "blossom as the rose" and provide "prosperous and happy homes to thousands of homeless Americans." The San Felipe and Desert Land & Water Company was organized and proposed to build a reservoir in Banner Canyon, drill a 3000foot tunnel up into the snow country of the Cuyamacas, and bring life to the "rich empire plains known as the Colorado Desert," which it said contained 5,000,000 acres and almost all of it arable. Incidentally, the dizzying prospect that the tunnel might pierce many new rich gold veins was an added inducement to invest.

Perhaps in some ways these promoters, and many others in Southern California, were merely a century ahead of their times, for in describing the desert's Borrego Valley, the company's brochure stated:

A little north of the dam, lies Borrego Bay, an arm of the Desert, embracing in its mountain-girted area, 100,000 acres of rich, clayey soil, under a tropical sun. Completely sheltered by high mountains, excepting in the gap, through which it looks out into the Desert, it can, with a wind-break of ever-green trees in the gap, be made comfortably cool in the warmest weather. Beyond this gap, is an empire of rich, clayey soil, almost perfectly level.

To those who might shun the desert and yet still have money in their pockets, the brochure pointed to the dry eastern slopes of the great mountains:

To him who, notwithstanding...successful experiments of the French colonies in the heart of the burning plains of the Great Sahara of Africa...to him who still dreads the Colorado Desert, we offer a home on Government land in the beautiful valleys of the eastern slope of the Cuyamaca range, completely sheltered from the warm Desert winds and the fogs of the Pacific Ocean...These gentle mountain slopes, naturally charming to the eye, when covered with vineyards and orchards, will excell the far-famed vine-clad hills of France and Italy.

The general impression, according to Van Dyke, was that the Californians had worked up the boom, but "the sad and homely truth is that nearly all the innocents were wise and successful men, who insisted on being shorn."

As had happened in the founding days of New Town, when they had happily sold to the "crazy" Alonzo Horton a large share of the pueblo for 27 1/2 cents an acre, the San Diegans had been only too eager to again dispose of their idle lands to the supposedly unwary newcomers. But, as they watched the rising boom, they began to have second thoughts, as related by Van Dyke:

Shall I, who have lived on beans and peppers and rustled clams these many years on the salt-sea shore so as to hold my lots, now see some rich old duffer from the East get still richer at my expense?

Not much! I haven't skinned dead cattle to save their hides in dry years, and drunk mescal instead of good whiskey, for nothing. We never knew what the cussed country was worth until outsiders found it out, and now we are green enough to let them make all the money out of it.

As the banks were full of the money deposited by the strangers, which they were willing to loan "the solid old citizens" at fifteen percent, the natives had little difficulty, as Van Dyke expressed it, "in rescuing enough of the precious soil from the hands of the unworthy stranger." They bought on contract, a third or a fourth down, as had become the custom, at prices five to fifteen times the original prices "and they went around the corner and smiled in their sleeves at the way in which they had again taken in the 'tenderfoot.'"