Lionel Manufacturing Company was founded in 1901 by Joshua Lionel Cowen and Harry C. Grant. The company originally manufactured small battery powered electric fans.
Lionel's first electric train was designed as an attraction for shoppers in a toy store. It was made by fitting a small electric motor under a model of a railroad flatcar, and ran on 30 inches of track.
Lionel's first commercial attempt at producing electric trains was called "the Electric Express". First powered by a battery, a 110 volt transformer soon followed. In all twelve of the first "electric express" models were sold.
In 1906 Lionel revolutionized model train design by adding a third rail to the track. The third rail, or center rail, carried the currrent, while the two outer rails were ground rails. The spacing was changed to 2 1/8 inches apart, and this design soon became the standard of the industry.
Lionel's popularity continued to grow and cattle cars, coal cars, train stations, passenger cars and tunnels were added to the line.
As more American homes were being wired for electricity, Lionel trains became one of the most popular toys in America. By 1909 Lionel was calling their trains "the standard of the world".

In an interview with The New Yorker magazine in 1947, Cowen claimed to have invented the flashlight. Cowen said in 1898 he attached small canisters containing light bulbs and batteries to a flower pot to illuminate the plant. Cowen said he sold the rights to his invention to Conrad Hubert, who later tried selling the invention without the flower pot, thus essentially a flashlight.
Lionel trains' prosperity lasted into the 1950's. 1953 was Lionel's best year but by 1959 sales had dropped to less than half. In September 1959 Lionel was sold to a group of businessmen led by Roy Cohn, Joshua's great nephew.
In 1999 Lionel trains were named one of the top ten toys of the 20th century. To date Lionel
has sold more than 50 million train sets. The name Lionel is still revered amng train collectors today.