History
The name for O gauge and O scale is derived from "0 gauge" or "Gauge 0", because it was smaller than Gauge 1 and the other existing standards. It was created in part because manufacturers realized their best selling trains were the smaller scales.
In the United States, manufacturers such as the Ives Manufacturing Company, American Flyer, and Lionel Corporation used O gauge for their budget line, marketing either Gauge 1 or Wide gauge (also known as standard gauge) as their premium trains. One of the Lionel Corporation's most popular trains, the 203 Armoured Locomotive, was O gauge and ran on tracks with rails spaced 1 1⁄4 inches apart. The Great Depression wiped out demand for the expensive larger trains, and by 1932, O gauge was the standard, almost by default.
Because of the emphasis on play value, the scale of pre-World War II O gauge trains varied. The Märklin specifications called for 1:43.5 scale. However, many designs were 1:48 scale or 1:64 scale. Early Marx Trains and entry-level trains, usually made of lithographed tin plate, were not scaled at all, made to whimsical proportions about the same length of an HO scale ("half O") piece, but about the same width and height of an O scale piece. Yet all of these designs ran on the same track, and, depending on the manufacturer(s) of the cars, could sometimes be coupled together and run as part of the same train.
After World War II, manufacturers started paying more attention to scale, and post-war locomotives and rolling stock tend to be larger and more realistic than their earlier counterparts. This has been reflected in the change from O gauge to O scale: gauge describes merely the distance between the rails, while scale describes the size ratio of a model as it relates to its real-world prototype.
Since the early 1990s, O scale manufacturers have begun placing more emphasis on realism, and the scale has experienced a resurgence in popularity, although it remains less popular than HO or N scale. However, newer manufacturers including MTH Electric Trains, Lionel, LLC, Atlas O, and Weaver are making very exact, 1:48 scale models of trains.
Read more about this topic: O Scale
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