This was inspired by the Clyde Beatty/Cole Brothers circus that visited Springsteen's hometown of Freehold, New Jersey every summer. In the song, we hear about all the unusual folks who are part of the circus: the sideshow performers, the ferris wheel mechanic, the acrobats and the barker among them. At the end of the song, the circus boss spots a little boy and asks if he'd like to join the show.
Springsteen made up the characters, but he could relate to Billy. "I've stood around carnivals at nights when they're clearing up and I was scared," he said in a 1974 ZigZag interview.
Springsteen was intrigued by the constant travel of the circus, a lifestyle similar to his as a touring musician. There are many parallels in the professions, including the equipment hauls, the strange cast of characters, the visits to small towns and the will to entertain.
In his book Songs, Springsteen wrote that the song is about "The seduction and loneliness of a life outside the margins of everyday life."
The elephant trumpet was simulated by a tuba played by Garry Tallent, an E Street Band member who typically played bass. The song showed up in some of Springsteen's setlists from 1973-1974. Done live, it was was rather unusual, with Tallent playing the tuba and Danny Federici on accordion.
The last line is "All aboard, Nebraska's our next stop." Springsteen released his album Nebraska in 1982.
Billy is never named in the lyric - in many of Springsteen's early songs the title doesn't appear.