The original horse drawn cars first carried passengers on April 29, 1891 on steel tracks laid from the Oak Grove neighborhood in Monterey (think Del Monte Hotel/Naval Postgraduate School area) into Pacific Grove, ending at Lighthouse and 17th. The cost for a one way ticket was ten cents – quite a bargain and much preferable to horse drawn open carriages traversing the muddy streets.
The horse drawn era lasted into the 20th century. In 1901, a bond was issued to electrify the system. From the accompanying photo, you may notice the single track with the power feed overhead in the middle of Lighthouse Avenue in Pacific Grove. The electric line was then extended to the Southern Pacific Station on Ocean View.
This allowed the company to run cars at 15 minute intervals and the popularity generated by the new streetcars convinced the owners to extend the tracks to San Carlos Church and School in Monterey. The last streetcar ran on December 4, 1923 when it was replaced by bus lines.
For more information, a book by Eric Hanson called the Monterey and Pacific Grove Street Railroad is widely available.