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Prior to the 1950s, there was little distinction between toy trains and model railroads--model railroads were toys by definition. Pull toys and wind-up trains were marketed towards children, while the first model railways were marketed towards teenagers, particularly teenaged boys.
Today, S gauge and O gauge railroads are still considered toy trains even by their adherents and are often accessorized with semi-scale model buildings by Plasticville or K-Line (who owns the rights to the Plasticville-like buildings produced by Marx from the 1950s to the 1970s). Ironically, however, due to their high cost, one is more likely to find an HO scale train set in a toy store than an O scale set.
Prior to World War II, toy trains were often made of lithographed tin. Post-war toy trains were more frequently made of plastic, a trend which continues today.
Consumer interest in trains as toys waned in the late 1950s, but has experienced a resurgence since the late 1990s due to the popularity of Thomas the Tank Engine.