Lionel when they went into OO in 1938 was very aware of HO and the battle of the gauges. On page 28 of the 1939 Lionel catalog is a most interesting quote that caught my eye recently. The quotation is from Making and Operating Model Railroads by Raymond F. Yates (New York: Appleton & Company, 1938), where he states “Experts have found that ‘OO’ power units properly designed operate ten times more efficiently than do ‘HO’ units.”

The large motors that all but fill early locomotive superstructures by Scale-Craft and Nason were certainly more robust than the comparable, smaller motors used in HO at that time. In their 1936 catalog Nason listed two types of motors as separate sale items, the “Super Power” rated at 10 volts AC or DC and the “Light Duty” motor rated at 6 volts AC or DC. The initial Scale-Craft motor for 1937 was their 7 pole, permanent magnet motor which ran on 24 volts DC current, which was soon joined by their 12 volt AC/DC universal motor, a big motor that fills the cab of any steamer it was applied to in their line. In the photo a standard Scale-Craft motor is on the right and a pre-war Varney HO motor on the left (more information on this motor here, from their 1938 assembly instructions). Ten times more efficient I don’t know, but the S-C motor is at least three times bigger!

By even the late 30s, however, small motors were getting better and there must have been some good running locomotives out in HO. Lionel was overstating the case in their catalog and actually was a part of the problem in a sense, as they used AC power and sold models for two or three rail operation instead of focusing on two rail and DC.

HO would win the “battle of the gauges” (HO vs. OO) for many reasons, one of them certainly being that HO that it got sorted out pretty quickly around the 12 volt DC motors and two rail operation.