Some of the early Märklin steam engines in the larger scales actually operated like real steam engines, with fuel, a burner, and steam power to move them along the tracks. This attention to detail extended to the doors of the passenger cars, which could be opened and closed, and roofs that users could remove to reveal papier-mâché passengers inside.

In 1911, Märklin built a six-story headquarter for itself just outside of Stuttgart. The building, which is still standing, accommodated 600 workers by 1914, but World War I drained the company’s staff and caused Märklin to switch to the manufacture of wartime products.

By the time the company got going again in the 1920s, it had done away with the wide number 2 and 3 scales in an effort to focus and regroup. But the company continued to produce realistic trains and accessories, including handsome electric lamps to illuminate layouts.

In fact, the way in which electricity was delivered to Märklin trains was the company’s first major breakthrough of the 1920s. It came in 1925, when Märklin introduced a new 20-volt system to make its electric trains safer to use since they could now get their power from standard, household current. By 1929, the number of employees would be back up, this time to 900.

The major Märklin innovation of the 1930s occurred in 1935, when the company introduced its H0 scale, which was so named because it was half the size of 0 scale (today it is more commonly known as HO, pronounced 'aitch oh' rather than 'aitch zero'). H0 made tabletop railroads possible. Other train manufacturers quickly seized on the H0 system for their sets, but Märklin trains were not always compatible—the wheels on Märklin cars were not insulated, which caused shorts.

Models from this period include the RV 12890 steeple cab locomotive (the clockwork version was numbered 890), the HR 66 12920 locomotive, the 1750 Rheingold baggage car, and the 1780 sleeper car with real bunks. One particularly prized antique Märklin model locomotive from this era is the SLR 700. Even rarer is the R700; those made for export to the U.S. had a cow catcher in front, while ones bound for England did not.

By the end of the 1930s, Märklin had devised a "perfect circuit," which permitted remote-control-reversing of cars on a track. The company also introduced a fully functional catenary system so that rail lines that relied on such overhead power systems could be realistically depicted in Märklin layouts.

The most famous train to take advantage of this new technology, the Crocodile, would become Märklin’s flagship. The articulated train was a reproduction of a Swiss train of the same name that took passengers over St. Gotthard Pass. Deliveries began in 1935 for 0 and 1 gauge tracks (models CCS 66/12920 and CCS 66/12921 respectively).

Another world war put Märklin’s toy train production on hold. When the factory resumed production, one of its first new products for 1947 was an update of the best-selling Crocodile, only this time it was produced in H0 scale. The articulated frame of this new CCS 800 Crocodile helped the train negotiate the sharp curves of H0 layouts.

The 1950s saw refinements to Märklin’s third rail (it was placed below the roadbed with contacts that stuck up through the ties). The company also produced its only clockwork locomotive in H0, the S870. A circus-train set with steam locomotive, a cage wagon for animals, and an exotic "Oriental caravan" whose bedroom boasted a hand-painted interior was also sold, although it never made it into any of the company’s catalogs.

Technical breakthroughs in the decade included the shift from tin to plastics for train bodies and other parts, as well as the introduction of the TELEX coupler, which enabled remote-controlled uncoupling. By the mid-1960s, sound effects for horns were introduced, and by the end of the decade, Märklin was marketing a K Track system, which allowed tracks to be laid on surfaces that lacked roadbeds.

In the 1960s, Märklin was known as a predominantly H0 company, but in 1969 it revived many of its 1 scale models, sparking a resurgence of interest in this larger scale. A few years later, in 1972, Märklin would go in the opposite direction when it launched the 1:220 Z scale, which was for decades the smallest train in the world.

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