The Rise and Fall and Rise Again of Lionel Trains

Christopher Coleman,
Originally written May 9, 1988
Last updated, Jan 5, 1997

This document is hereby Copyrighted © 1986,94,97 by the author. All rights are reserved by the author. All types of reproduction in part or in whole, or use in a for-profit manner are not permitted without express permission of the author.

Before Lionel

In the year 1901, Joshua Lionel Cowen (origially Cohen), a resident of New York City, sent a flatcar, with an electric motor and battery cleverly concealed underneath, around a small circle of brass track. From that seemingly unimportant event emerged a corporation and a legend.

Cowen's maternal grandparents lived in the small town of Suvalk near the disputed Polish/Russian/Lithuanian border. His grandfather, Joshua Kantrowitz, and his uncle died of cholera the same day. To support her family, his grandmother, Ida Kantrowitz, ran a small bakery that was given to her after the owner had left.

Both of his paternal grandparents died when his father, Hyman Cohen, was a young boy. In 1859, his parents were married and shortly thereafter they moved to England where Hyman started a cap manufacturing business. There they lived for five years and had two children: Abraham, who died at 26, and Rachael, who became the grandmother of Ray Cohn, the man who in a hostile fashion took over Lionel in 1958. After some time, Hyman discovered that the damp London climate did not agree with him so they moved to New York City. "...on August 25, 1877, Joshua Lionel came into the world. (In later years Cowen always gave 1880 as the year of his birth - probably out of vanity)" (Hollander 14).

Cowen was the eighth of nine children. Even as a child he had a mechanical mind. Once he was intrigued by the moving eyes in one of his sister's dolls and he cracked its head open to see how they worked. As a boy, he often had truancy problems at school, but his family put too much value on schooling to allow him to drop out. They enrolled him in Peter Cooper Institute High School. The school gave him a chance to tinker with electricity. It was here that Cowen later claimed to have invented the electric doorbell. "However, he was discouraged by an instructor who pompously advised him nothing would replace the knuckles for announcing ones arrival"(22).

Cowen did so well in Peter Cooper that in 1893 he entered the College of the City of New York. But, he could not adjust to the confines of a formal education. In short order he dropped out, returned, again dropped out, enrolled at Columbia University, and dropped out there to become an apprentice to Henner & Anderson, an early dry cell battery manufacturer. Then he took a job at the Acme Lamp Company. This is where he claimed to have assembled one of the nations first dry cell batteries, but since it lasted only thirty days, he abandoned it. This job gave Cowen the experience he needed to launch Lionel.

Cowen filed his first patent on June 6, 1899, on a device for igniting a photographic flash. In the patent he described the general design of the apparatus but failed to give details as to the operation problems or construction materials. "Mechanically, the apparatus was no more than clever, exhibiting good design rather than any new principle or design"(23). When Cowen was about twenty two he was given a Navy contract to equip 24,000 mines with foolproof detonators because of his work with Photographic fuses. In constructing the mine detonators he had enough mercuric fulminate to blow off the lower end of Manhattan, but he delivered them safely and the Navy was pleased. In January 1900, he filed his second patent which improved on the his first design but again failed to give details.

On September 5, 1900, Cowen and a colleague from Acme, Harry C. Grant, started a business in lower Manhattan called the Lionel Manufacturing Company, but they had nothing to manufacture. One hot day when Cowen was sitting in his office waiting for a cool breeze he got the idea of an electric fan. He quickly assembled and marketed the electric fan, but the weather soon cooled and so did public interest. Soon after, Cowen was walking through lower Manhattan when he stopped at a toy store window where he saw, among the toys, a push train. He then had the vision of it going around a circle of track without needing attention. This was the vision which started a legend.

The Pre-War Era

This was the time period beginning with Lionel's first production in 1901 and ending in 1941 when the factory converted to war material production for World War II. Cowen and Grants first customer was Ingersoll, the owner of the shop where Cowen saw the push train. Their first product was a large but simple, open gondola, called the "Electric Express", propelled by the previous fan motor. The track was merely two steel strips inserted into slotted ties with a 2 7/8 inch width between the rails, as were all Lionel trains until 1905.

In June 1902 they decided to add something more interesting to the line with a "City Hall Park" trolley and a two foot suspension bridge. 1902 was the first year a catalog was published which also listed containers of acid and lead plates which converted household current for train use and dry cell batteries for homes without electricity. In 1903 they brought out an electric B & O locomotive and a motorized derrick car, and the original gondola was changed from wood to metal.

Several changes occurred in 1904. Cowen married Cecelia Liberman, the Lionel workshop was moved nine blocks to the north, and Cowen hired an Italian Immigrant, Mario Caruso. In future years it would be Caruso who did the dirtier job of keeping the factory running smoothly while Cowen managed sales. That year they introduced a nickel plated model of the B & O Engine and gondola, but there were few orders and it is doubtful any were produced.

In 1906 a great change took place in the line. In that year Lionel added a third rail which carried the current and the outer rails, which were the ground rails, were only 2 1/8 inches apart. This was the the system adopted by most other manufacturers. They were rigidly pre-assembled. Three trolleys, two steam engines, two passenger cars, seven freight cars and a wall transformer were offered. Cowen's son, Lawrence, was born in 1907, and became the company's emblem on boxes and in catalogs and was to become its President.

Over the next few years the factory made a series of location changes. In 1910, they moved to New Haven Connecticut, lured by tax breaks offered by their chamber of commerce. In 1915, Cowen tired of commuting and moved the factory to Newark, New Jersey. Following the great expansion of the company due to increased sales and war orders, more room was needed. Caruso picked a site in nearby Irvington, which was the first of a series of Lionel plants in that town. In 1915, Lionel was forced into starting production of "O" gauge trains with a 1 1/4 width to compete with other manufacturers. Later, however, "O" gauge would become Lionel's exclusive hallmark. In the later half of the decade the train line remained stagnant. At this time Lionel was also filling Navy contracts for compasses, binnacles, and signal and navigational equipment. Because of the company's expansion, it was reorganized as simply the Lionel Corporation on July 22, 1918 with Cowen as President.

The 1920's were the "Golden Age" for Lionel. The Roaring Twenties provided an ample money supply for such commodities as electric trains. During this decade Lionel made its most fanciful and elaborate pieces it ever produced. This is when such accessories as the two foot square power station, the large model of the New York Hellgate Bridge, and a foot long switch tower were made. Their top-of-the-line sets included the nine foot long State Set with a twelve-wheeled engine and the Blue Comet. Some of the passenger cars had removable roofs so one could see the inside where there were even two bathrooms with movable toilet seats.

The prosperity did not last long. Although the Black Friday stock market crash occurred in 1929, Lionel did not experience the crash until 1930 when factory orders bottomed out. Despite this, Lionel continued building the extravagant and expensive train sets and accessories that it had during the twenties. Partly as a result of this, 1931 was the company's first loosing year, by $207,000. The cost of a Blue Comet 400E engine roughly equaled that of a three piece bedroom set or a used Model T. Cowen also personally lost a great deal of money in the stock market crash. In addition, both Cowen's and Caruso's salaries dropped to a fraction of what it had been the previous decade. In 1930, rather than selling off a part of the company, which Cowen did not want to do, he put in a "equality receivership". This meant the company would be appointed receivers by the court, who would approve all financial decisions. Incidentally, both receivers were of Cowen's acquaintance

In the meantime, the real railroads had been having a rough time and began introducing all sorts of streamlined trains. As they did, Lionel introduced models of the Union Pacific City of Portland and City of Denver, in "O" gauge, for they would have been too large for Standard gauge. In addition, they introduced a Mickey and Minnie Mouse hand car. The hand car was such a success that the company could not produce enough to keep up with demand . Over 253,000 were sold that fall. 1934 was the first year in four years that Lionel earned a profit, so much that all of their debts were paid off and the receivership was ended January 21, 1935. Although one of the receivers credited the hand car, they actually made little money because they were sold so cheaply and were meant to draw attention to Lionel streamliners which brought in the profit to save the company.

In 1935, Lionel's Charles Gioirro invented the first whistle in a model train. Lionel immediately installed it in its line of streamliner. Also that year the company introduced three more streamliner models of the Boston and Maine Flying Yankee, the New York Central Commodore Vanderbilt and the Milwaukee Road Hiawatha. As a follow-up to the Mickey Mouse hand car, Lionel created a wind-up Peter Rabbit hand car for Easter but sales were low and it was soon discontinued; they also produced two wind up speed boats which met with greater success. Last but not least, the automatic gateman, which has been in every catalog from 1939 to 1984. 1936 was the first year Lionel produced an airplane. It was electric and connected to tall tower and controlled by remote. For this too, the factory could not keep up with the orders. Naturally, Cowen marketed an airport to go along with it.

In 1937 Lionel unveiled its most detailed piece ever made, a precisely scaled Hudson Steam Engine. It was accurate down to the controlls in the cab (minus the throttle). Lionel even claimed the tender had the correct number of rivets on the tender. Although a collector later informed the company that the model tender was three short of the prototype's 1,402 rivets.

Despite Cowen's good treatment of the workers, about one third of the factory workers unionized and Lionel experienced its first strike but the plant manager held out and the strike was abandoned after two weeks. The workers accepted his 15 percent rate increase offer.

In 1938, Lionel produced a new gauge, 00, which had 3/4 inch between the rails. The first and only engine produced in 00 gauge was the Hudson.

The late 1930's and early 1940's saw great advances in trackside accessories. Before, they just sat, occasionally lit up, but not much else. Suddenly a large array of remote control devices were offered. An electromagnetic crane could pick up "scrap metal", a bascule bridge could raise and lower, a coal tipple could load coal from one track to another, and a log loader could do the same. Some cars would dump their load or uncouple at the touch of a button.

Ironically, the next year the grand standard gauge trains were discontinued. "By the time Pearl Harbor was bombed, Lionel had $5.5 million in government contracts" (154). The last year trains were made until after the war was 1942 . Although Lionel was given three awards for outstanding wartime production, they were forced to return money on their many contracts because of excessive profits, which was not uncommon. To preserve its market during the war, Lionel sold a paper train and a railroad planning book. Near the war's end Mario Caruso decided to leave the company because he believed union organizers interfered with the smooth running of the plant. He left just before Lionel's greatest days.

The Postwar Era

At the same time the war was winding down , Lionel was preparing to resume train production. The day after Japan surrendered Lionel's war orders were terminated, it had all sorts of new innovations ready. The only set produced in 1945 was rather small but it offered the two biggest postwar features- the knuckle coupler and smoke. The smoke was produced by a pellet dropped into the smokestack and heated at first by a light bulb and later by a coil. Throughout the late 40's and early 50's Lionel produced a huge array of accessories such as coal, log, culvert, ice, and barrel loaders and unloaders; spotlight and beacon towers; crossing gates and signals; moving controlmen, switchmen, brakemen, and policemen, streetlights and water towers; just to mention a few. S-2 twenty wheeled steam turbines, dual motored F-3 diesels, and massive GG-1's electrics were also built.

On a sadder note Cowen's wife Cecelia died in 1946 of a heart condition. In October 1950, a great celebration of the company's 50th anniversary was held where the factory's workers gave Cowen a gold plated F-3 diesel. This was the company's highest mark recording $32.9 million in sales in 1953, but it did not last.

The late 50's saw the train market decline severely for Lionel. One reason was that a recession reduced the money supply. Another was that professional modelers were switching to HO gauge because it is more accurately detailed. A third reason was that children were turning to model race cars rather than trains. For a time Lionel continued to produce a large number of products. By 1958, the company showed a $469,000 loss and continued to loose money. Cowen was no longer at the helm - he was in his eighties by then. Lawrence, the president then, tried other fields such as fishing equipment and boat motors all of which simply became a drain on the company. A pastel girl's train was made in 1957 but flopped because it was so unattractive. By the end of 1958 the company was $1.2 million in the red. The next year Cowen sold all of his stock to Roy Cohn and his group. Lawrence, who was in the Orient at the time, was so disillusioned by his father's action that he sold his stock to Cohn. As a result, when he returned most of the company's administration resigned and were replace by Cohn's men.

The next decade was filled with battles over control of the company. Lionel under Cohn made so many acquisitions that they couldn't all be managed properly and the company had lost $13.3 million by the time he resigned in 1963. Surprisingly there was a train line every year although they were cheaply made and lost money.

Finally in 1967 the company sold all the train making machinery and in 1969 leased the train making rights to Model Products Corporation (MPC), a toy division of General Mills. The original Lionel Corporation continued as a holding company of toy stores for many years, but floundered in and out of bankrupcy in the late 1980's until final bankrupcy and disolution in the early 1990's.

The Fundimentions/LTI Era

MPC, later Fundimensions, manufactured Lionel trains from 1970 until 1986. Fundimensions at the beginning used Lionel's old designs and color schemes but as time went on the added new cars, engines, and accessories. Fundimensions, being experienced in toys and plastics, greatly improved the line with it own style of innovation. In the early 70's the line was rather small. By the 1978 the line grew to nearly its size in the early 50's, but declined in the early 80's only to peak a bit in 83 then slide to nearly what it was before. Fundimentions was not afraid to create new castings for the line, but they had an afinity for plastic and often used as a cost cutting measure in places where plastic had no place, such as motor frames and wheels. Fundimentions also had no flare for operating accesories, and the vast majority were reissues or new designs on postwar versions. Quality was good on the whole, with top of the line items being far superior to old Lionel and bottom of the line being worse. By 1985 Fundimentions was consolidated into General Mills' new Kenner-Parker Toys division, and Lionel's line suffered further shrinkage.

"...and barely survived a move to Tijuana. Lionel had hoped to save money with the Mexicans working in the this new factory for 55 cents an hour, but the planning was bad, the work was shoddy, and the move turned into a fiasco ... So early this year Lionel moved back to Chesterfield township, just outside of Detroit "(Jenson, NBC).

That was in the summer of 1986. The attempted move biased die hard Lionel fans against foreign production, and Lionel would not attempt any major importing for 10 years. The failed move seemed the last straw for KPT, for in 1986 it sold Lionel to a Detroit Real-Estate developer, Richard Kughn.

Kughn created Lionel Trains Incorporated, an autonomous train maker. In the following two years there were several changes in the production line, some to collectors chagrin, and other to their delight. The line was also increased to the size it was in the postwar. Initially there were numerous excursions into semi-scale models and Pre-War reissues, but their production was reduced greatly by 1991, and Pre=War reissues dissapeared altogether.

The line was significantly re-vamped providing more and higher quality beginner level equipment and an overall more balanced line. The MPC "cheap truck" sydrome was obliterated by the announcement that all Lionels would have two operating couplers and solid steel wheelsets. Quality and selection were also greatly increased. LTI introduced new and innovative items with a vigor matched only by the Lionel Corp. of the 1950's. They made substantial use of the latest electronics in such items as Railscope, RailSounds, RailSounds II, electronic e-units, and the TrainMaster control system. LTI also created contemperary locmotives and cars, such as TTUX, Dash 40's and Intermodal Cranes. MPC's new introductions were usually based on 1950's or 60's prototypes.

The most controversial decision of the LTI Era was new limiteations on Lionel Dealers. They were prohibited from selling current year production trains at train meets of via mail order. It was LTI's feeling these saled methods removed the sevice from the sale. The customer response was negative, but soon dispeared as previous year inventory filled the void.

The LLC Era

In September 1995 Wellspring Associates LLC acquired LTI and the trademarks of the original Lionel Corporation (now bankrupt), previously leased by MPC and LTI. Neil Young, the singer and co-developer of the TrainMaster system, was a partner in the acquision. The new company was named Lionel Limited Liability Corporation, or Lionel LLC for short. Their intentions included increased marketing toward the general population rather than just the toy train market. With the coming of the 96 and 97 catalogs their intention clearly involved bringing back the "feelings" of the 1950's using artwork and a horizontal format catalogs as in the 50's. The breadth and size of the line have remained about the same, except for the dissapearance of the G Gauge line.

The management has hinted at intentions to retool some of the tradional locomtives in more realistic renditions . This is no doubt due to MTH, the new trainmaker on the block. MTH has quckly developed a large line of imported, well deatiled and reliable locmotives and cars. MTH has begun offering sets and transformers, but not starter sets as yet. They have moved into the cracks of Lionels armor, such as periodic quality problems, lower deatiling and higher price. MTH openly taunts Lionel about these in large product to product comparason ads.

Other trends at Lionel include increased subcontracting to importers and the division between the Classic (regualr line) and Hertage (near scale) Lines. Lionel has also been accused of price fixing in its refusal to allow discounting on the Haritage line. The next three years will hold the answers as to how Lionel will answer it comptition and its customers.

Works Cited

L Back to The Irvington, Hillside and Mount Clemens Railroad