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The earliest toy trains were made of lead and had no moving parts. Some had wheels which flipped, but these needed to be pushed or pulled. Some of the early 19th-century drive toy rails were made of tinplate, like the large, durable, stylized locomotive toys from the U.S., that were painted red and gold and decorated with hearts and flowers. model trains retail perkasie pa

Around 1875, technological improvements in materials and manufacturing allowed tin to be scraped, cut, wrapped, and lithographed faster than previously.
Toy trains were revolutionized when Märklin, a German company which specialized in doll house accessories, sought to create an equal toy for boys where a continuous revenue stream could be ensured by selling add-on accessories for years after the initial purchase. In addition to boxed sets comprising a train and track, Märklin offered extra track, rolling stock, and buildings offered separately, creating the predecessor to the modern model train layout featuring buildings and scenery along with an operating train.

Electric trains adopted, with the first appearing in 1897, made from the U.S. firm Carlisle & Finch. As home use of power became more prevalent in the early 20th century, electrical trains gained popularity and as time moved on, these electric trains grew in sophistication, gaining light, the ability to change management, to emit a whistling sound, to smoke, to remotely couple and uncouple cars and even load and unload freight. Toy trains by the first half of the 20th century were often made of lithographed tin; later trains were often made mostly of plastic.
Pull toys and wind-up trains were marketed by children, while electrical trains were marketed towards teenagers, especially teenaged boys. It was during the 1950s the modern emphasis on realism in model railroading began to grab on.
Consumer interest in trains as toys waned in the late 1950s, but has experienced resurgence since the late 1990s due in large part to the popularity of Thomas the Tank Engine.

Today, S gauge and O gauge railroads are still considered toy trains even by their adherents and are often accessorized with semi-scale model buildings by Plasticville or even K-Line (who owns the rights to the Plasticville-like buildings created by Marx from the 1950s into the 1970s). However, due to their high price, one is more inclined to locate an HO scale or N scale train set in a toy shop than an O scale collection.

Many modern electric toy trains comprise sophisticated electronic equipment that emit digitized sound effects and allow the operator to safely and easily run multiple remote controller trains on a single loop of course. In recent decades, many toy train operators may operate a train using a TV camera in the front of the engine and hooked up to a screen, such as computer monitor. This will show an image, like that of a genuine (smaller size) railroad.

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