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I am building an O gauge layout. I would like to have a section where the track drops below the table by about 10 inches. How much space do I need for the grade? I am planning on running some fairly large scale steam locomotives (Hudsons, Mikados, Berkshires, etc) but no articulateds or anything huge like that

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Depends on what kind of grade you want. At 3%, you need 10" / .03 = 333.33 or about 28 feet. However you need vertical easements on both ends for a smooth transition. How do you plan to go back up?

I'm building my layout now with a second level at 10" and the max grade is 2.6%. The entire transition is over 40' to go up 10", but it is the same route going up and down.

This information is, IMO, important in order to have trains run well up and down grades on a layout.

I think the upshot is that one needs to have long runs of 25 to 40 feet (which IMO is very long) in order to change grades and have an overpass(es) on a layout.

My whole layout is only 40 feet long so I opted not to have such changes in grades on my current layout

I have the Lionel graduated trestle set that was on a 4 foot by 8 foot plywood board layout that my father built for me when I was a child. That worked OK for trains of only a few cars in length. For longer trains, I believe the grade/slope should be substantially less steep than that provided by the graduated trestle set.

I went with 6.5" largely because all the pre-fab tunnel openings I bought at York were at that height. I didn't want to go any higher to attain a 2.5% grade (which I am very pleased.) Over the years there have been very few cars that didn't like the 6.5" opening. One was the Lionel Crayola car; another, one particular type of double stack. The major design stress point was creating an over-and-under 90 degree trestle crossing. That required creating a loop using approximately 260" of Gargraves flexible track. In rough numbers, it required a 7' x 7' table area to make the loop in order to achieve the desired height and grade. (In the middle of the loop is a thriving city filled with buildings, lights, streets, Miller signs, cars, people, moving streetcars...not any wasted space!)  The grade vs height vs available-space tradeoff is certainly one of the most important design issues in a multi-layered layout. In my case, I traded off the ability to run 100% percent of all available rolling stock just to achieve the grade I desired in my available space.

My layout has a 16" change in elevation over about 26 ft, which is about a 5% grade. This is much larger than normally recommended, however I can pull a 10 car train up this 5% grade not problem, if pulled by a diesel. A steam engine, cannot pull as many cars up the same grade.

You also have the option of using a helper to go up the grades. Although 5% is very large, it works in O-gauge quite well. about 2/3 of this grade is along one wall, and the other 1/3 is in a closet with a 90 degree corner at 060 curve. this helps hide the visual impact of using such a large grade.  I do not use any helpers in my current operation, only single engines and can operate on my layout quite well. I also prefer shorter trains as they look better. However I can also run a 16 car train if I wish, which I try not to do any more, as the shorter trains give a better operation.

One advantage to O-gauge is that you can run very high grades if there are no other options.

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