The railroad to Seattle ended at Salmon Bay because the railroad company was unwilling to build a trestle to cross the bay. From the stop at “Ballard Junction,” (as the terminus was called) passengers could walk across the wagon bridge and continue the journey to Seattle. In addition to gaining notoriety as the end of the railway line fledgling Ballard benefited economically from the railway, because the railroad provided a way to bring supplies into the area and also to export locally manufactured products. Ability to ship products spurred the growth of mills of many types. Ballard’s first mill, built in 1888 by Mr. J Sinclair was a lumber mill; the second mill, finished the same year was a shingle mill. After the Great Seattle Fire in 1889 the mills provided opportunities for those who had lost jobs in the fire, which in turn spurred the growth of the settlement as families moved north to work in the mills.

The City of Ballard: 1890-1907

With the rapid population growth the residents realized that there might soon be a need for laws to keep order, a process that would require a formal government. In the late summer of 1889 the community discussed incorporating as a town, but eventually rejected the idea of incorporation. The issue pressed, however, so several months later, on November 4, 1889, the residents again voted on the question and this time they voted to incorporate. A municipal census, conducted shortly after the passing vote showed that the new town of Ballard had more than 1500 residents, allowing it to be the first “third class town” to be incorporated in the newly admitted state of Washington.

By 1900, Ballard's population had grown to 4,568 making it the seventh largest city in Washington, and the town was faced with many of the problems common to small towns. Saloons had been a problem since the beginning, and in 1904 the drinking and gambling became so bad that the mayor ordered the City of Ballard officially closed for the day in order to prevent gambling. The city also faced problems with loose livestock, so the Cow Ordinance of 1903 made allowing cows to graze south of present day 65th St. a punishable offense. The city faced more serious problems, however, with two of the most difficult being the lack of both a proper water supply and a sewer system. The one weakness of the location on Salmon Bay was the lack of nearby freshwater springs, which meant that water came from local ground water wells. Lack of a proper sewage system contaminated the ground water, compounding the problem.

The town continued to grow, reaching 17,000 residents by 1907 and becoming the second largest city in King County. However Ballard, like many of the other small cities surrounding Seattle continued to be plagued by water problems. The rapid population growth had overwhelmed the city’s ability to provide services, particularly a safe drinking water and sewer, and Ballard’s city government had tried unsuccessfully to deal with the crises, so the citizens began considering asking Seattle to annex the town. In 1905 the question was voted on and the residents voted against annexation, hoping for a solution, but the problems refused to go away. In July 1906 the Supreme Court ruled that Seattle was not required to share water with surrounding communities. Ballard had been dependent on a water sharing agreement with Seattle, but the Supreme Court decision left them with inadequate water, forcing a second vote on the annexation question. By this time the residents realized the inability of local resources to cope with their situation and the majority of residents voted in favor of annexation. On May 29, 1907 at 3:45pm the city of Ballard officially became part of Seattle. On that day Ballard citizens showed their mixed feelings about the handover by draping their city hall with black crepe and flying the flag at half mast