IAW some Marx history, Louis Marx and Sammy Bergnam had been close friends for many years. Sammy directed Unique Arts , a New Jersey toy manufacturing company. Marx both sold toys for him and purchased Unique Art toys to resell and the two companies commonly exchanged tools and dies between the NJ and Gerard, Pa plants. Suddenly as a complete surprise, in 1948 Unique Art developed a line of 0 gauge trains which would be a direct competitor to Marx trains. The Unique Art train was marketed as both a boxed set and as individual circus animal cars through the Jewel Tea Company (I seem to recall that pennsyfan has this circus set). Marx then did what only Marx could do...he decided to market a line of trains in direct competition to Unique Arts, initiated their design in January of 48 and had the line complete and ready for shipment by Christmas of 1949. These cars are now remembered by Marx Collectors as "Seven Inch Trains". This situation didn't last long. Unique Lines quickly faded from the scene but the Marx 7 inch cars lasted until about 1958 for freight cars but longer for the passenger cars which derived from them. The most famous being the 1860's type train which went by the name "William Crooks" and even more famous, the most colorful train Marx ever produced, the Disney windup Mickey Mouse Meteor.
So here is the toy that really upset Louis Marx, the Unique Lines, clockwork, steamer . Pictured below with two of the associated freight cars, a box car and a caboose.
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Best Wishes Don
P.S. @Steam Crazy - That is a great picture of you and your grandson. Best wishes. OBTW its warm and sunny here in Texas!!