Lionel Line

Last year a hustling little corporation with three big factories at Irvington, N. J. sold 1,000 miles of railroad track, 15,000,000 crossties, more sleepers than Pullman Co., more locomotives than American Locomotive and Baldwin Locomotive combined. New York Central's President Williamson had written the company a letter of enthusiastic praise. Baldwin Locomotive's Chairman Vauclain had even allowed himself to be photographed with his grandchildren in front of one of the company's sleek shiny locomotives. Railroad engineers themselves had openly admitted that its rolling stock was the best in the field. The company was Lionel Corp., world's biggest maker of toy trains.

A Lionel railroad sells from $1 to $350. The more expensive models are complete with a red railroad station marked LIONELVILLE, a sponge rubber roadbed moulded to look like rock ballast, a thick steel tunnel through which speeds a locomotive, fire box aglow, pulling a string of Lionel Line coaches. Lionel Corp. still makes stem-wind locomotives, but President J. (for Joshua) Lionel Cowen, who gave his middle name to the company, was a pioneer in electrification. Onetime apprentice with Henner & Anderson, early makers of dry batteries, he spent his teens inventing a flashlight, finding new uses in surgical instruments for small electric bulbs. At 20, struck with the idea of electricity for toy trains, he founded Lionel Corp., produced a locomotive, coach and caboose operated by a dry battery for $6. Today, 35 years later, Lionel electric trains start, stop and reverse by remote control. One of President Cowen's prides is the fat 400E, a standard (2 3/4 in.) "hog," which, with tender, measures 30 1/2 inches and sells for $45.

Theoretically the desire for toy trains is unlimited. President Cowen's biggest problem, which is also the problem of many another toymaker, is the marked seasonal character of his business. The sales curve starts to climb steeply in October, sinks almost out of sight after Christmas. It takes an enormous amount of capital to keep Lionel Corp. going during its nine lean months. Last May, hampered by lack of capital, with some $296,000 owing to creditors, Lionel Corp. slipped into receivership.

But President Cowen's inventiveness had not deserted him. In addition he was blessed with a pair of shrewd receivers named Worcester Bouck and Mandel Frankel. The receivers negotiated a bank loan. Then the company approached Walt Disney Productions of Hollywood, secured permission to make a Mickey Mouse handcar to scoot around Lionel tracks. During the winter 235,000 were sold at $1 apiece. President Cowen, nearly always one jump ahead of U. S. railroad men, streamlined his trains. At last year's Century of Progress in Chicago he exhibited a toy replica of the Union Pacific's crack M-IOOOI--the first toy train built absolutely to scale (1/45th). Orders began streaming in by the thousands. Last week in Newark, U. S. District Judge Guy L. Fake, congratulating the receivers on their prompt rehabilitation of the company, terminated the receivership, handed the company back to its management with liquid assets greatly increased. All creditors had been paid in full within eight months. Christmas sales had been the biggest in history, sales for the full year biggest since the peak year 1930. Said Judge Fake: "This was the most successful receivership in the history of this court."

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