Lionel Corporation was an American toy manufacturer and holding company of retailers that was founded in 1900 and operated for more than 120 years. It started as an electrical novelties company. Lionel specialized in various products throughout its existence. Toy trains and model railroads were its main claim to fame.David Lander "Lionel" American Heritage, Nov./Dec. 2006. Lionel trains have been produced since 1900, and their trains were admired by model railroaders around the world for the solidity of their construction and the authenticity of their detail. During its peak years in the 1950s, the company sold $25 million worth of trains per year.Osterhoff, Robert J. "When the Lights Went out at Lionel," Classic Toy Trains, May 1999. Page 76.
In 1969, the company sold their model train lines to General Mills. It continued to operate until 1993 as a holding company for their toy stores. In 2006, Lionel's electric train became the first electric toy inducted into the National Toy Hall of Fame. The model trains are still in production, sold by Lionel Corporation's present-day successor company Lionel, LLC.
History
The original Lionel Corporation was founded in 1900 by Joshua Lionel Cowen and Harry C. Grant in New York City.Corporate Snapshot The company's devotees disagree over the date of incorporation: the official paperwork is dated September 5, but the paperwork was not filed until September 22, more than two weeks later. Initially, the company specialized in electrical novelties, such as fans and lighting devices."Lionel's Very First Catalog Discovered!!"
Pre-World War II era (1900–1942) Lionel's first train, the Electric Express, was long thought by historians to have been intended for use as a storefront display, rather than for sale to consumers. Delivered in December 1900, it operated on a brass track and was powered by a battery and a motor that Cowen had intended to use for an electric fan. Cowen hoped the public's fascination with railroads and electricity would draw attention to his other goods for sale. Instead, the public approached store owners about buying trains, prompting Lionel to begin making toy trains for the general public. Lionel sold 12 examples of the Electric Express.Stephan, Elizabeth A. O'Brien's Collecting Toy Trains, 5th Ed., Krause Publications (2006), Page 181.
More recently, Greenberg's Guide to Lionel Trains (2014) concluded differently: it said that the first Lionel product was the motorized Converse Trolley, with the Electric Express being made to diversify the motor's use.
Lionel's earliest trains were larger than the sizes commonly available today, running on two-rail tracks with the rails 2 inches apart. In 1906, Lionel began offering a three-rail track that simplified wiring of reverse loops and accessories. Its outer rails were 2 inches apart, which did not match any of the existing standards that other manufacturers had been using since 1891. Whether this was an accidental misreading of Märklin's 2 gauge specifications or an intentional incompatibility is unclear.
Lionel marketed the non-standard track as "The Standard of the World," soon adopted the name in catalogs as Standard Gauge, and trademarked the name. When other U.S. companies began using Lionel's standard, they usually called it wide gauge. Starting in 1915, Lionel followed most of its U.S. competitors and adopted the smaller O gauge standard for its budget-level trains.
During the pre-Great War era, Lionel competed with Ives Manufacturing Company, Boucher Manufacturing Company, Dorfan, Louis Marx and Company and American Flyer.
By the end of World War I, Lionel was one of three major U.S. toy train manufacturers; the others were American Flyer and Louis Marx and Company. Cowen convinced department stores to incorporate his toy trains in their Christmas displays, linking toy trains to the holiday, and making them popular Christmas presents. Lionel made its trains larger than those of its competitors, making them appear a better value. Competitors criticized the lack of realism of Lionel's trains. Cowen had been unwilling to invest in the equipment necessary for lithography, so its early offerings were simply painted in solid colors of enamel paint with brass detail parts. Lionel responded by targeting advertising at children, telling them its products were the most realistic toy trains. Additionally, Lionel criticized the durability of competitors' products in ads targeted at parents.
By 1922, Lionel was competing mainly against American Flyer and Ives Manufacturing Company . Also in 1922, Boucher bought out Voltamp and started making what was known as the "Rolls-Royce" of standard gauge trains. In 1925, American Flyer jumped into the standard gauge market; and by 1926, Dorfan started making their own standard gauge trains as well.
William Walthers, a large seller of model railroads, asked Cowen in 1929 why Lionel painted its trains in bright and unrealistic colors. Cowen said that the majority of trains were purchased by mothers for their children, and the bright colors attracted women buyers.Hollander, Ron. All Aboard!, 1981. Page 89. In 1929, Lionel opened a factory in Hillside, New Jersey, where it produced trains until 1974.
By the 1920s, Lionel had overcome Ives to become the market leader, selling metal trains with colorful paint schemes. Lionel's fierce ad campaigning took a toll on Ives, which filed bankruptcy in 1928. Lionel and American Flyer bought Ives and operated it jointly until 1930, when Lionel bought Flyer's share outright, causing Lionel to operate Ives as a subsidiary until 1932.
The Great Depression badly hurt Lionel and other toy companies. In 1930, Lionel's operating profit dropped to $82,000 - its operating profit in 1927 had been more than $500,000 - and in 1931, it lost $207,000. The trains were considered a luxury item. At the height of the Depression, one of Lionel's more extravagant locomotives cost as much as a used Ford Model T. In an effort to compete with companies that were willing to undercut Lionel's prices, without diluting its premium Lionel and Ives brands, Lionel introduced a line of inexpensive electric toy trains under the Winner Toys''' or Winner Toy Corp. brand name, which were sold from 1930 to 1932. The starting price for a set, which included a transformer, was $3.25. These and other efforts to improve its financial standing were unable to keep Lionel from going into receivership in May 1934.
The product widely credited with saving the company was a wind-up handcar featuring Mickey and Minnie Mouse, which operated on O gauge track and sold for $1. Lionel manufactured 250,000 units, but was still unable to keep up with demand. But at a wholesale price of .55 cents, the handcar's sales did not provide enough profit to pay off Lionel's debts of $300,000; however, the model did provide much-needed cash. It was the success of the more expensive but profitable 752E City of Portland Union Pacific Streamliner that gave the company much needed revenue. As Lionel's first scale-model, the Streamliner gave the company considerable presence in the model market. It was the start of the company's scale-detailed, die-cast look. While numerous equally successful streamliners were issued in the following years, the handcar experiment was not repeated. Lionel left the novelty market to the cheaper toy manufacturers.
Lionel avoided bankruptcy and emerged from receivership the next year. By 1939, Lionel had discontinued its standard gauge products, concentrating instead on the more-affordable (and lucrative) O-gauge and OO gauge, which it had introduced in 1938.
Lionel ceased toy production in 1942 to produce nautical items for the United States Navy during World War II. During this period, Lionel produced ads aimed at American teenagers, to begin planning their post-war layouts. Lionel also introduced the so-called Lionel Wartime Freight Train, a detailed set of cut-and-fold models of Lionel trains printed on cardstock. These were notoriously difficult to put together.
Models Lionel made many models, including scale models, of actual trains. The Red Comet and Blue Streak sets included models of New York Central's Commodore Vanderbilt locomotive. In 1934, Lionel made a 1:45 scale model of Union Pacific's M10000 diesel streamliner (also called the City of Denver) that runs on O gauge track. It was followed by a model of this diesel's successor, the City of Portland. The 763E and 700E are 1:48 scale models of 4-6-4 Hudsons. In 1938, Lionel made a model of Chicago, Burlington and Quincy Railroad's Burlington Zephyr streamliner called the Flying Yankee.
Post-war era (1945–1969)
Lionel resumed producing toy trains in late 1945, replacing their original product line with less colorful, but more realistic, trains and concentrating exclusively on O-gauge trains.
Many of Lionel's steam locomotives of this period, had a new feature: smoke, produced by dropping a small tablet or a special oil into the locomotive's smokestack, which contained an electric heating element. Many diesel, electric, and steam engines made after 1950 had Lionel's Magne-Traction, which made the wheels magnetic in order to grip the track better. Lionel's most popular toy train ever mass-produced was the Santa Fe F3, numbered 2333, released in 1948.
By 1953, Lionel sales reached their highest level at over $32 million. During the same year, Lionel reportedly became the world's largest toy manufacturer. As the 1950s progressed, Lionel sales began to decline in proportion to the growing prevalence of space and military-themed toys and slot car racing sets. These changes coincided with the decline in rail travel as private automobiles proliferated, and the launching of Sputnik, which began the space-race between the United States and Soviet Union. There was an associated military build-up as the Cold War progressed after World War II. The remaining interest in toy and model trains that existed was geared toward HO scale, which gradually overtook O gauge in popularity. It had more realistic detailing and its smaller size enabled the enthusiast to do more modelling within the same amount of space. Lionel attempted to keep pace with changing trends by offering space and military-themed train sets, and introducing their own HO line of trains. But they were never able to reclaim the market share they once held in the toy industry, and by 1958 reported a net loss of $469,057.
Company founder Joshua Cowen officially retired that same year. On September 8, 1965, Cowen died at the age of 88 in Palm Beach, Florida.All Aboard! The Story of Joshua Lionel Cowen & His Lionel Train Company, by Ron Hollander
Beginning in the 1960s, Lionel attempted to diversify into other product lines, such as phonographs, science, weather station and plastics engineering kits. Toy train sales continued to decline and the company endured a series of management turnovers. In 1967 Lionel purchased American Flyer trains from bankrupt A. C. Gilbert Company, but did not have a new catalog for that year.
In December 1968 Ronald Saypol, Joshua Cowen's former grandson-in-law, became President and CEO of the Lionel Corporation, and in the following year, in an attempt to divest the company of what was by then determined to be a cash drain by the board and shareholders, began negotiations to sell their toy train line and lease the Lionel name to Model Products Corporation (MPC), a subsidiary of General Mills, Inc. 1969 was the final year the Lionel Corporation published a toy train catalog and manufactured O gauge trains.
Models