Why do Lionel trains have three rails? After all, real trains usually have two. This unrealistic feature is a legitimate drawback for Lionel and other makes of O gauge trains, but the decision made sense at the time.
Lionel didn’t invent 3-rail track. Marklin standardized five track gauges in 1891, and some manufacturers chose to use two rails while some chose three. Initially, Lionel used a 2-rail system on its first trains from 1900. But in 1906, when Lionel introduced its so-called “Standard Gauge” trains (which didn’t actually adhere to any existing standard), it went with a three-rail system.
Advantages to 3-rail track
Lionel used the center rail for power and the two outer rails for ground. This made complex track setups very simple using the technology of the day. For example, with a three-rail system, the track can loop back on itself without any issues. A two-rail system has to reverse the polarity in order to avoid a short circuit in that situation. In 1906, there was no good, easy way to do that.
Another advantage to a three-rail system is that you can insulate one rail on a section of track and use it as a substitute for a push-button. This lets the train activate a switch as it approaches, so that an oncoming train won’t derail by hitting a switch in the wrong position. The insulated section can also activate crossing gates, signals, or other accessories. It’s harder to do this with two-rail track.
Too late to change
Lionel’s three-rail system ended up being very popular. In 1915, Lionel introduced its first O gauge train, which remains its most popular size today. It, too, used 3-rail track. By the end of World War I, most of Lionel’s surviving competitors also used three-rail track, so it became a standard. It wasn’t until 1946 that one of Lionel’s direct competitors, A. C. Gilbert’s American Flyer, decided to switch to 2-rail track. Gilbert gave Lionel a run for the money in the 1950s but never unseated Lionel as the market leader.
The switch was admittedly a calculated risk. A two-rail system wouldn’t be compatible with existing equipment. During World War II, Lionel and its competitors stopped making electric trains. As a matter of policy, Lionel always tried its best to make its new trains completely compatible with its old ones. The four-year interruption allowed Lionel to make an exception. Ultimately, Lionel decided to change its couplers but retain three-rail track. Louis Marx also decided to keep three-rail track. Gilbert decided to buck the trend and try two-rail track.
The after effects
In the end, all three companies thought they made the right decision. And throughout the 1950s, all three had a license to print money. Fads and tastes changed in the 1960s though, and all of them fell on hard times. Gilbert went bankrupt in 1967 and several companies bought up parts of its former empire, including a struggling Lionel. Marx sold out to Quaker Oats in 1972 and stopped making trains in 1975. Lionel went bankrupt in 1969 and sold its train line to General Mills. Lionel has changed ownership a few times in the decades since but retains a cult following to this day.
All three companies ran into trouble in the 1960s, and the number of rails in their track had little to do with their success or failure in the end.