Don't know exactly when it started but it is only my guess that it came about when the West was still wild and the railroad was being built across the USA in the 1800s. The RR would build a depot on the up-wind side of the tracks so the smoke and cinders would blow away from the depot and mercantiles, business, schools and prosperity would also spring up on that side. The land on the other side of the tracks was cheaper for working class families but dirty dangerous and harder and to get to. And it was also very hard for the law to patrol there so many houses of ill-repute sprang up on that side. As a poor family got ahead in the economy they would move over to "the good side of the tracks" where it was safer and goods and services were easier to find. Anyone who could not afford to was assumed to be a drug addict, a whore, a criminal or the offspring of one. Many were just people who lost their health or their descendants who could not get an education and were left behind. The "good" people did not like to mix with anyone who was from "the wrong side of the track". In some small western RR towns you can still see the difference in architecture of the two different cultures. On one side you will find churches, old schools, and classic Old West mercantile buildings with their high false fronts. On the other you will find tin-shack ruins, crumbling adobes, and sometimes a big suspicious looking Victorian style house that looks very out of place.

It was a dividing line in many small towns separating the rich from the poor