Lionel’s postwar market lead falters during turbulent 1960s

Before ceasing production of toy trains for the war effort in 1942, Lionel Corp. became one of the country’s leading toy-train manufacturers.

With World War II over in 1945, Lionel was about to enter its most glorious period of existence. In Part II of our three-part series on Lionel trains, we look at the years 1945-1969, known as the postwar years. Of the three eras of Lionel trains (prewar, postwar and modern), it is the postwar era that is the most popular and has the largest group of collectors.

Production of Lionel trains resumed in the fall of 1945. From the start, major changes were evident. The new trains had a less colorful but more realistic look to them.

Standard-Gauge trains were now out of the picture, and the O-Gauge trains had newly designed trucks and couplers that were no longer compatible with the older, prewar models. And the gondola cars were now plastic. As the years went by, plastics increasingly replaced the metals used in Lionel’s products.

Many of the toy trains also had a new and exciting feature—smoke. The smoke was created by dropping a special oil or small pellet into the train’s smokestack, further developing a more realistic look and feel of the trains.

The years 1946-1956 are considered by many to be Lionel’s Golden Age. By the beginning of the ’50s, Lionel was outselling its closest competitor, American Flyer, nearly 2 to 1.

Lionel had now become a large empire. So large, in fact, that from 1953-1955 Lionel was running head-to-head with Louis Marx and Co. as the world’s leading toy manufacturer.

After 1956, however, Lionel began seeing declines in sales. By the late 1950s, toy-train hobbyists preferred the smaller, yet more realistic, HO-Gauge trains. And children were becoming more mesmerized by toy vehicles and toy airplanes than they were toy trains.

In an effort to increase sales, in 1957 (the last profitable postwar year of Lionel Corp.) the company introduced a line of HO-Gauge trains licensed by Italian toy manufacturer  Rivarossi, and a line of slot-car racing sets. Unfortunately neither product line was successful, and a breakdown in cooperation with Lionel over financial issues led to the end of Lionel releasing HO-Gauge trains in 1958.

At the end of 1958, Joshua Lionel Cowen resigned as Chairman of the Board. Less than a year later, Cowen and his son, Lawrence, sold their stock in the company to a syndicate led by Cowen’s grand-nephew, Roy Cohn.

Eccentric and controversial, Cohn was a conservative attorney by trade who rose to fame during Sen. Joseph McCarthy’s investigations into espionage against the U.S. in the early ’50s. From the start, Cohn moved the company in a new direction with an extreme makeover of sorts.

Cohn began the new era for Lionel by replacing most of Cowen’s management team. Cohn also changed the business direction of Lionel Corp. by adding subsidiary companies that were unrelated to toy trains. These subsidiary companies included Dale Electronics, Sterling Electric Motors and Telerad Manufacturing.

Lionel also formed a partnership with the Portal Chemical Co., a toy manufacturer that developed and produced chemistry sets aimed as educational toys for aspiring junior scientists. Conveniently, the company’s owner, Harold M. Porter, was a member of Lionel’s board of directors. The “Lionel-Porter” (as it was designated) product line was cataloged from 1961-1968 in an effort to capitalize on the increasing interest in science among children, thanks in part to the Space Race. The product line included Porter-famed Chemcraft chemistry sets, Microcraft microscope sets, Biocraft biology sets and sets educating youngsters on mineralogy, physics, geology, mathematics and industrial science, along with a junior line of tool sets.

But diversification efforts proved unsuccessful for Lionel. In 1963, Roy Cohn was forced to resign from the company after losing a proxy fight. Under Cohn’s leadership, Lionel suffered declining sales, quality-control problems and huge financial losses. In the four years Cohn ran Lionel Corp., the company lost $13 million.

The company, now known as Lionel Toy Corp., was hit with more bad news on Sept. 8, 1965, when 88-year-old founder Joshua Lionel Cowen passed away. Business continued to get worse for Lionel by the late-’60s as interest in toy trains continued to decline.

standard catalog of lionel trains

Things were no better for Lionel’s closest competitor, American Flyer. Also hit by the declining interest in toy trains among children, American Flyer’s parent company, A.C. Gilbert Co. filed for bankruptcy in January 1967. In May 1967, Lionel purchased the American Flyer brand name for only $150,000. However, Lionel lacked the necessary income to exploit and market their newly acquired product line and filed for bankruptcy as well on Aug. 7, 1967.

In 1969, Lionel unceremoniously exited the toy train business by selling the product tooling and dies and licensing the name to the Fundimensions Division of cereal maker General Mills. The glory days of the late 1940s and 1950s were clearly a distant memory, and an era of toy train dominance was sadly over.

However, Lionel trains would soon make its return to the toy train business. In the third and final part of our series on Lionel trains, we will look at the years 1970 to the present, known as the modern years. ?

Justin Moen is a collector of 1:18-scale die-cast cars, 1:16-scale die-cast farm tractors and Hot Wheels. He has edited more than 25 titles for Krause Publications. He may be reached at

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