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The first toy trains were made from lead and had no moving parts. Some had wheels which turned, but these had to be pushed or pulled. A few of the early 19th-century push toy rails were made from tinplate, such as the large, durable, stylized locomotive toys in the U.S., that were painted red and gold and decorated with hearts and flowers. model trains steam locomotives

Around 1875, technological improvements in materials and manufacturing allowed tin to be stamped, cut, wrapped, and lithographed faster than ever before.
Toy trains were altered when Märklin, a German firm which specialized in doll house accessories, sought to make an equal toy for boys where a continuous revenue stream could be guaranteed by selling add-on accessories for years after the initial purchase. Along with boxed sets comprising a train and track, Märklin offered additional track, rolling stock, and buildings sold separately, creating the predecessor to the modern model train layout featuring scenery and buildings along with a working train.

Electric trains followed, with the first appearing in 1897, made by the U.S. firm Carlisle & Finch. As residential use of power became more common in the early 20th century, electric 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 cargo. Toy trains by the first half of the 20th century were often made of lithographed tin; afterwards trains were often made mostly of plastic.
Pull toys and wind-up trains were marketed towards children, while electric trains were marketed towards teenagers, particularly teenaged boys.
Consumer interest in trains as toys waned in the late 1950s, but has undergone resurgence since the late 1990s due in large part to the popularity of Thomas the Tank Engine.

Now, S gauge and O gauge railroads are still considered toy trains even by their own 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 produced by Marx in the 1950s to the 1970s). However, due to their high cost, one is more likely to locate an HO scale or N scale train set in a toy shop than a O scale set.

Many modern electrical toy trains contain sophisticated electronic equipment that emit digitized sound effects and allow the operator to safely and easily run several remote control trains on one loop of track. In the last few years, many toy rail operators may operate a train using a TV camera at the front part of the engine and hooked up to a display, such as pc monitor. This will show an image, like that of a real (smaller size) railroad.

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