Of American-English origin, the phrase the balloon goes up, and its variants, mean: the action, excitement or trouble starts.

The early occurrences of when the balloon goes up—used literally and figuratively—that I have found indicate that the phrase originally alluded to the release of a balloon to mark an event.

These early occurrences are as follows, in chronological order:

1-: From the Republican Banner (Nashville, Tennessee, USA) of Thursday 22^nd September 1870—the fact that balloon goes up is in quotation marks seems to indicate that this phrase was already well established:

WILLIAMSON COUNTY FAIR.
Proceedings of the Second Day.

The weather to-day and the entertainment offered were worthy of a better attendance. The crowd, though larger than yesterday, was insufficient to be remunerative to the Association. The truth is, the people all over the State are growing somewhat satiated with fairs, as at present conducted. The task is not an easy one to provide an entertainment which will always draw a crowd; but, nevertheless, it seems that a real showman could provide something to draw a crowd, and that is, after all, the real pleasure in a fair. It is a noticeable fact, at all the fairs, that the day when the “balloon goes up” is the one when more people come than any two preceding. Then, why not have something of the kind each day? The fairs only last four or five days at each place, and if some efforts were expended in the direction of sensation, there are people enough who would attend to fully remunerate the expenditure, and at the same time not neglect the various features of real utility. What a showman Artemus Ward would have made had he only been president or manager of an agricultural fair.

2-: From The Clinton Advocate (Clinton, Missouri, USA) of Thursday 31^st May 1883:

INTERESTING READING MATTER.
Affairs which treat of dollars and cents and in which all are interested.

[…]
Shirtings at 7c, 8c and 10c, the cheapest in the world, at Goldsmith’s.
When the big Balloon goes up at the People’s Store then the fun commences.
The new designes [sic] of Wall Paper for this season are coming in daily at Zener & Montgomery’s.

3-: From The Daily Inter Ocean (Chicago, Illinois, USA) of Saturday 26^th September 1896—with reference to the politicians John Boyd Thacher (1847-1909) and David Bennett Hill (1843-1910):

When the Thacher balloon goes up Senator Hill will likely be found holding on to the rope.

4-: From one of the unconnected paragraphs commenting on the results of local elections, published in the Marshall County Democrat (Lacon, Illinois, USA) of Thursday 22^nd April 1897:

Oh, well, politics is—politics, and you can’t tell what will happen when the balloon goes up. The defeated candidates should have cut the parachute loose sooner.

5-: From the Buffalo Morning Express (Buffalo, New York, USA) of Wednesday 16^th June 1897:

HIS PLATFORM.
New One Has Been Delivered to Jim Naples.
HE IS NOT SAYING MUCH
BUT HE ADVISES EVERYONE TO STAND CLEAR OF THE ROPES WHEN THE BALLOON GOES UP—MIXED ISSUES ARE THE BANE OF HIS POLITICAL LIFE.

During a lull in the continuous performance on the local political stages yesterday, Senator Jim Naples bounded into view with a merry chortle, a sunburst smile, a dagger and an interview. A moment before he appeared the gauzy skirts of Chames McKinley Lamy, the lightning tchange artist, vanished in the wings on the left. Senator Jim came from the right.
“I am on top of politics again, and it is mighty hot,” said Senator Jim.
The Senator wore a wonderful white Fedora hat, with a big black band and a narrow black binding on the brim. His chest and tummy filled out a gorgeous marron waistcoat. His big horeshoe diamond sparkled in his pink shirt-front. His acorn diamond glittered in the ring on the little finger of his left hand. He wore his famous double-cross trousers and new patent-leather shoes.
“I’m going to have another birthday next week,” continued Senator Jim. “The one I had last month was all right, but the weather was too cold. My friends drank whisky instead of beer. I’m going to have a beer birthday next Monday.”
Senator Jim has planned his political resurrection with great care. He has opened a big place at No. 117 Main Street in the 1^st Ward. His license hangs over a picture of Judge Tommy Rochford, to which is pasted a lithograph of Gen. Grant. His home at No. 27 State Street in the 19^th Ward has been refurnished. The Senator is the king-bee Italian of Buffalo and his two hives are admirably placed in the heart of the Italian colony in the two wards.
“How are your constituents?” the Senator was asked.
“None of them is sick,” said the Senator. “If they are, I hain’t heard of it. But they want a lot of work and getting work in Buffalo is like finding diamonds in spaghetti.”
“Doesn’t the civil-service law help you?”
“Silver-service Reform is stale beer,” said the Senator. “It’s no good. It’s a humbug. It split the Democrats like a broken window last fall. Now it comes here with a committee of Silver-service Reformers and says that every man must get examined and have a tag on a list like his leader paid a dog-tax for him. Huh! Silver-service Reform! Silver-service ——” and the Senator lapsed into old-fashioned English.
“The Raines law——”
“That’s a State law,” said Senator Jim. “That ain’t got no place in this municipal campaign any more than Silver-service Reform has. What business has Silver-service Reform got monkeying with the Board of Public Works? Huh! Soon they’ll be runnin’ the Water Bureau under the Raines law. Huh! Nit! This here runnin’ boards from National and State platforms into a municipal election to make a floor for candidates to stand on is a skin game.”
“Will you favor the indorsement—”
“No indorsements at all,” said Senator Jim. “This here is going to be a cash campaign and no notes is going to go. The people is sick of all that. They want to know the men they’re voting for and what’s back of them. When you elect a man you and everyone else knows what’s ahead of him.”
“If you swell the majorities this year you’ll come out ahead?”
“Politics never swells nothing but heads,” said Senator Jim. “They’s going to be over a hundred get elected. Every man who has got constituents has got to be in politics or die. They ain’t got a collar big enough to fit Jim Naples’s dog and no man is going to tag me. I’m going to have a lot of boards all my own. My platform has four boards in it. First, I’m for me and my constituents. Second, I’m against Silver-service Reform. Third, I’m against everything but municipal issues. Fourth, this fight is going to be so hot that every man that wears a collar will sweat until he’s got to take it off. It’s going to be a bare-neck fight, the kind that makes it easy to cut off a lot of heads.”
“You are prominently mentioned by prominent mentioners as a promising candidate for Assembly this year or the Senate next year?”
“I ain’t making any promises at all,” said Senator Jim. “About that there Senate business, remember board No. 1 is my platform.”
Tony George and all the faithful will stand by Senator Jim so long as there is a stick of macaroni left in the bowl.

6-: From one of the unconnected paragraphs making up the column Local Jottings, published in The Homer Index (Homer, Michigan, USA) of Wednesday 20^th September 1899:

Be on hand when the balloon goes up at the county fair Oct. 3, 4, 5 and 6.

7-: From the Carbondale Leader (Carbondale, Pennsylvania, USA) of Friday 11^th July 1902:

TRAINED ROOTERS.
The Curbstone Striplings Will Attend the Honesdale Ball Game.

The Amalgamated Association of Curbstone Striplings No. 400 are rapidly getting in trim for their journey to Honesdale on Saturday. Last evening they held an enthusiastic meeting on the coping of the park fence at which plans and arrangements for making an augmented amount of noise were formed. The committee on regalia has already given each member a Crescent shaped badge and equipped every two with a megaphone. In the words of their chief, Arthur Thomas, “they will certainly be heard among the onion growers.”
At last night’s meeting they administered the second degree to a member from Pittston and elected all patrolmen, William McAndrew, James Bell, Patrick Carden, Fred Huddy and chief McAndrew, honorary members of the organization—so that there will be no trouble when the balloon goes up after the victorious Crescents return home.

8-: From The Inter Ocean (Chicago, Illinois, USA) of Saturday 23^rd May 1903:

CHICAGO HOPES TO BEAT ILLINOIS.
Harper’s Team Will Give Huff’s Men a Hard Fight on Marshall Field.

Members of the University of Chicago baseball team and its supporters believe the Maroons can and will beat Illinois on Marshall field this afternoon in the crucial game of the Inter-University league series. If Illinois, now at the top of the league table, can win this game, Coach Huff’s men will again fly the pennant. If the Maroons win, they will still have a good fighting chance to land the championship.
The Midway students held a big mass meeting on the campus yesterday morning for the purpose of encouraging the team and arranging for systematic rooting at the game today. Speeches were made at the mass meeting by Coach Stagg, Captain Harper, Professor Linn, Dr. Goodspeed, Professor Chandler, and “Shorty” Ellsworth. All the speakers expressed the opinion that Chicago had more than an even chance to win.
“There are some occasions,” said Mr. Stagg, “when Chicago men always want to be around. They want to be around when the balloon goes up. The balloon is going to go up on Marshall field tomorrow afternoon. It is needless to say whose balloon. It is understood that Illinois will go up. But if by any chance it should be Chicago’s balloon that goes up, every Chicago man should be there to help pull it down again.”

9-: From the account of a hose-race competition between Stanton and York, published in The Norfolk Weekly News-Journal (Norfolk, Nebraska, USA) of Friday 5^th August 1904:

As an indication of what will happen on Thursday afternoon when the balloon goes up for the state championship event between Stanton and York, the fact that both Stanton and York smashed the world’s record in the regulation hose race, sounds pretty good.

10-: From the New Castle Weekly Herald (New Castle, Pennsylvania, USA) of Wednesday 12^th July 1905:

STAMPING WORKS TEAM OUTCLASSES FRIENDSHIP A. C.
Philipps Gets Awful Beating in Sixth Inning When the Balloon Goes Up
ARBURY DOES PRETTY WORK ON SLAB FOR STAMPING WORKS—STORY TOLD BY SCORE

The New Castle Stamping Works team defeated the Friendship A. C. in the stamping works grounds by a score of 20 to 5 Saturday afternoon. The Friendship team was out-classed at all points. In the sixth inning the Stamping works solved Philipps’ delivery and hit him for 8 runs.

11-: From the Mattoon Journal-Gazette (Mattoon, Illinois, USA) of Monday 27^th July 1908:

JACKSON PARKERS BEAT ICE PICKERS
Cold Storage Nine Loses Contest in Sixth Inning, When Balloon Goes Up—Other Notes.

Special to Journal-Gazette.
Jackson Park, July 27.—The ice pickers, an aggregation from the cold storage plant at Mattoon, met defeat at the hands of the Jackson Parkers yesterday afternoon, after they had the game won in the sixth inning. In this inning the score stood 6 to 0 in favor of the pickers, but after that they cut no ice and allowed the park team to run in eight men over the home plate, the final score being 8 to 7 for the parkers.

12-: From The Bakersfield Californian (Bakersfield, California, USA) of Saturday 24^th April 1909:

HIGH SCHOOL DEVELOPS FINE CONTESTANTS FOR ANNUAL MEET

Last evening a very interesting field tryout was held at Beale park by the high school athletes. The track was not in very good condition, and considering the short turns to be made, three in the quarter mile, the time was fast. Some of the men trying out have more than surprised the team by their development.
[…]
Lloyd Stroud looks like a “comer” in the shotput, 440 and 220. He puts the shot in the best form of anyone that has taken part in the meets during the last five years. And form is not all he has either; when the balloon goes up it can be expected to drop on the sunny side of 40 feet every time.

13-: From “A college education that is worth the money”, an unsigned article published in the Ottumwa Tri-Weekly Courier (Ottumwa, Iowa, USA) of Thursday 29^th July 1909:

Parents ought to see that their boy has had to work before he goes to college. They ought to see that he has had some chance to develop in his mind some ability to judge for himself, and that he has been taught to know what is going on around him. Otherwise when he comes out of college, and gets back home to start into practical hard headed life, he will find that some boy who has been a news boy, a messenger boy, or a reporter or bill clerk, will beat him on everything in which they start together. The boy who has had to make his own way has had his faculties of judgment and perception sharpened by contact with the world. He has kept his eyes open, and when the balloon goes up he sees it every time.