There were livery stables for renting horses, and residents of upper-class neighborhoods like Oakwood had carriages, but most people who lived inside the city limits got around on foot.

That all began to change on Christmas Day.

That morning, Raleigh began a mule-drawn streetcar system -- converted to electricity in 1891 -- that forever changed the way residents got around the Capital City.

The electric streetcar brought Raleigh into the modern era. It came along at a time when the city's population tripled, created some of the first suburbs and gave a crucial boost to a company now called Progress Energy.

Streetcars became a part of daily life in Raleigh, in an era that some residents still recall.

Bill Hutchins, 81, remembers the day a friend who lived near the Executive Mansion on Blount Street put grease on the track, causing the streetcar to spin its wheels.

"It became a fad with the boys," Hutchins said. "The conductors had to get out and put sand on the tracks by hand."

But the streetcar also caused serious problems that the city is still dealing with today. The streetcar spurred segregation along race and class lines, led to the beginnings of urban sprawl and bled downtown of many of the residents who kept it alive.

The streetcar stopped running in 1933, but the automobile continued many of the same patterns it had set in motion. Now, with cars clogging Interstate 40 and gas prices fluctuating, Raleigh is again looking at rail-based transit.

To be sure, the Triangle Transit Authority's planned $759 million rail line connecting Raleigh and Durham is a much different project in size and scope. But it would have similar effects -- some planned, some unintentional -- on how people live.

"In a way, we've come full circle," said Raleigh Councilman Thomas Crowder.

Mule-powered mass transit

Raleigh was a compact city in 1886.

The city limits -- which had been unchanged since 1857 -- were a perfect square, bound by St. Mary's Street to the west, North Boundary Street to the north, Haywood Street to the east and near Bledsoe Street to the south.

People lived almost on top of one another -- about 13,000 lived in the 1.2 square miles inside the city limits. On any given block downtown, you could walk to church, the corner store, school and even work. But the streets were unpaved and often muddy in winter.

On Christmas Day, the city debuted its first mass transit system to solve those problems. Thousands lined the streets for a big parade down the four-mile route of a new streetcar. It was pulled by mules -- nicknamed "Texas rats" by locals for their funny-looking ears.

"I remember well the appearance of the first streetcars, drawn by mules, with tinkling bells, and the crowds of people who were attracted by the novelty, all of whom took a ride -- not that they wanted to go anywhere, but simply for the sake of the ride," Raleigh native R.C. Lawrence wrote in 1944.

The tracks ran west along Hillsborough Street as far as St. Mary's College (now a high school), north on Blount Street near the Oakwood Cemetery and down Fayetteville Street to Cabarrus Street, stopping at the railroad depot.

After the novelty wore off, the problems began. As in other towns across the country, the streetcars were uncomfortably hot or cold depending on the season, and the mules were slow and tired easily. Sometimes, they stubbornly sat in the middle of the tracks.

In 1888, the first electric streetcar system debuted in Richmond, Va., solving many of those problems. Soon, electric streetcars were all the rage, across the country and in North Carolina.

In Raleigh, the streetcar charter was held by a private company, and the owners were constantly changing, announcing ambitious new plans, then running into financial problems. More than once, workers started to rip up tracks they had already laid down after a dispute.

"Gentlemen, settle your troubles," one newspaper article chided. "We are tired [of] walking. Put in a first class system and the entire community will bless you."

On Sept. 1, 1891, electric streetcars began regular service in Raleigh on the same routes the mules had followed. There were financial problems and other disputes, but the system became reliable by the turn of the century, and modern Raleigh soon followed.

Suburbs and segregation

Life was different in a city with streetcars.

Residents no longer had to live near their jobs or shops. They could move to one of the new suburbs -- Glenwood, Cameron Park and Boylan Heights -- to enjoy what was then considered living in the countryside.

"All of a sudden you could get on a trolley car for a nickel and ride to work in the morning and then back home at the end of the day," said Tom Hanchett, a Charlotte historian. "That opened up all sorts of areas to development."

It also proved a crucial tool for newly empowered segregationists.

Before the turn of the century, Raleigh and other Southern cities had a "salt and pepper" pattern of development, Hanchett says, with blacks and whites living next door to each other in the dense downtown neighborhoods.

The new suburbs, however, were almost exclusively white. In Cameron Park, residents had to sign a covenant restricting them from renting or selling to anyone "of negro blood," with an exception for household servants. Glenwood had similar restrictions.

The streetcar was not alone in causing segregation. Prejudicial banking practices, federal housing laws and local zoning regulations, along with other discriminatory Jim Crow practices, played a role as well.

"The increasing focus on Jim Crow around the turn of the century called for separation of the races in every setting, including residential," said Catherine Bishir, a historian who lives in Cameron Park. "But if there was no way to get out of the city, the middle class wouldn't have done it as readily."

The streetcar system also began a push to the north and to the west.

To serve the new suburbs, the Raleigh Electric Co., which had taken over the streetcar charter, extended the tracks farther west on Hillsborough Street and north on Glenwood Avenue. The new lines just drove growth farther in those directions.

Many in the city became concerned that growth was uneven.

In 1907, 4,000 people signed a petition demanding service be extended north to the Oakwood Cemetery and east along New Bern Avenue. City leaders and the editor of The News & Observer argued that more lines to the south and the east would keep growth balanced.

The Raleigh Electric Co. balked at placing new lines in the poorest parts of town, but it extended a short loop to South Park. At the same time, the company began planning a 100-acre amusement park, open only to whites, near the site of the Carolina Country Club, to promote growth along the Glenwood route.

The phrases didn't exist back then, but the streetcar had just helped invent white flight and urban sprawl.

The end of the era

During the 1910s, '20s and '30s, the streetcar was a crucial part of the urban fabric.

Wright Dixon, 84, grew up in the Hayes Barton neighborhood near the Glenwood route. Although his father had a car, he remembers riding the streetcar with his mother all the time.

"Everybody rode the streetcar," he said. "You had to get on the streetcar and go downtown to do anything exciting. You would go down to Belk's to get some shoes. All the doctors were downtown and the library was there."

Dixon remembers a common prank. A neighborhood boy would wait at the stand until a streetcar pulled up, expecting a passenger. Then he would run out and yank the rope connected to the overhead cable, causing the streetcar to lose power.

"The conductor would stop and get out, but by that time you were a half a block away," he said. "I got caught a few times."

Even then, the streetcar era was already passing in North Carolina. By some accounts, it peaked about 1920.

That year, about 2.4 million passengers rode Raleigh's streetcars, putting it roughly in the middle of the 16 systems then running around the state. (Charlotte, the largest, had 7.8 million riders, while Burlington had just 400,000.)

The following year, the General Assembly imposed a one-cent per gallon tax on gasoline and issued a $50 million bond to build roads. The state began paving highways in earnest, and the number of car owners in North Carolina tripled over that decade.

"That's how North Carolina became known as the Good Roads State," explained Walter Turner, a historian with the N.C. Transportation Museum.

By the end of the 1920s, many smaller towns had ended streetcar service. Cities began to look at buses, which were more flexible. The Great Depression caused streetcar ridership to drop further, and the operators never raised the fare above a nickel in two decades, hurting the bottom line.

On March 14, 1933, streetcar service ended in Raleigh, and the city turned instead to buses.

"I cried when they quit running," recalled Bill Hutchins, who was 7 years old at the time. "I went with Daddy and got on the bus and started to whimper that we didn't have the streetcars. They were just so much fun to ride."

Rail of the future

In 2005, if you want to go somewhere in Raleigh, chances are you drive.

There are roughly three cars for every four residents in Raleigh. The shops and homes and churches are spread out, with more than 325,000 residents living in a city of 110 square miles.

The automobile has accelerated the trends begun by the streetcar. The Research Triangle Park, N.C. State University and the Raleigh-Durham International Airport have pulled growth farther north and west.

Only about 2,000 people live downtown. Public and private interests are spending roughly $1 billion to lure more. Notably, one of the big investors is Progress Energy, the company that got its start as the Raleigh Electric Co.

The Triangle Transit Authority is another major project that is intended to change development.

The commuter rail line would be vastly different from the old streetcar. In today's words, the streetcar would be considered "light rail," while the new system will ride on railroad tracks. While the streetcar was within one city, the TTA trains will connect Raleigh, Cary, Research Triangle Park and Durham.

Still, some think that it could cause a similar transformation on the landscape it passes through.

David Godschalk, an emeritus professor of city planning at UNC-Chapel Hill, said the new rail system has the potential to create a new pattern of denser urban living. Residents could live, shop and play near the stations, and use the train to commute.

"They could live in these urban areas and then easily get back and forth to work," he said.

That sounds a lot like the old streetcar. But this time, planners like Godschalk think the commuter trains would counter some of the trends set in motion by the streetcar back at the turn of the last century by bringing people back to the city center to dense, mixed-use neighborhoods.

The new city would be a place where, if you wanted to go somewhere, you could walk, drive or take a train.

(News researcher Lamara Hackett contributed to this report.)