World War I helped make toy trains a hit in the United States. Early toy trains were pulled or had windup motors and even tiny steam engines. German toymakers dominated the market. In 1891, Germany's Marklin introduced the first train set to which track and accessories could be added almost indefinitely. But when World War I cut off German exports and anti-German sentiments rose, US manufacturers stepped in with bigger, cheaper sets. Among them was Joshua Lionel Cowen, whose brightly painted and well-marketed trains became a hit in the 1920s. After weathering the Depression and World War II, Lionel kicked off a second toy-train boom with a "dads only" open house in New York in 1946.
Source: Train Collectors Society webpage; 'Panati's Parade of Fads, Follies, and Manias,' by Charles Panati.