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Short History of Marx Toys

Background | Reintroductions | 1960s | Changing Times
Background of Marx Toys
Louis Marx & Company was founded in 1919 by its namesake, Louis Marx at 200 5th Ave, in New York City. Mr. Marx was a masterful salesman, he represented certain toy companies such as F.J. Strauss & Company, one of the lagrest mechanical metal toy companies, where Marx had received his early professional education.

Following a dispute with the owner, Marx had enlisted in the army for World War I. Honorably discharged after the Armistice, Louis Marx returned to the profession that he knew and established his own Representation company in a small office of the Fifth Ave. Building (FAB) as it was known within the toy industry.

Marx represented Strauss and a few other companies such as The Girard Model Works company and the Vermont Wood Toy company. His positive personality made the success of the business so that his younger brother David joined the business. Once established in 1921, Louis Marx & Company purchased the used tooling and product rights to two of the old Strauss products that were thought to have run their course: The “Climbing Monkey” and the “Mechanical Minstrel Singer”. Marx’s salesmanship brought these two products back to life. Manufacturing millions of units in Erie, Pennsylvania, the factory became known as the “Monkey Works” among the residents of Erie.
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Successful Reintroductions
Hot on the heels of success, Marx observed young Philippine boys whittling wood to make a toy that when wound up, would unwind and return again. This gave Mr. Marx the inspiration to introduce an industrial version of the handcrafted piece. In 1928, Marx began the production of 150 million yo-yos from 1928 – 1935. Following that “hit wave” Mr. Marx said in an interview that he would put it away and re-release a new version about every seven years. Marx felt that 7 years was the “generation” of the toy consumer. It would be brand new again for the new generation of 6, 7 or 8 year old kids.

During the height of the depression, Marx had three factories: one in Glendale, West Virginia and two in Pennsylvania (Erie and Girard). You can get more details from Marx Western Playsets, by Jay Horowitz.

Marx supported the war effort in World War II by converting his toy factories to make munitions, detonators, bazookas and other related war materials including the distinction of participating in the Manhattan Project. Following VE Day, General Dwight D. Eisenhower, the Supreme Commander of the Allied Forces in Europe called upon citizen Louis Marx as the United States Industrial Advisor. Later, while serving our country in Japan following VJ Day, Mr. Marx is quoted by Fortune magazineas saying that “…the Japanese are clever people. They do not have the wherewithal or the technology, but if we provide the capital and know-how, they can be an efficient source of product.” Late 1945, Mr. Marx began toy production in Japan for U S consumption. Note – Marx executives went on to industry leadership, such as Mr. Marx’s Japanese Office Assistant, who decades later became the CEO of Tomy Toy.

Following the success of “made in Japan”, and as prices rose, again Mr., Marx pioneered the next frontier by establishing The Elm Tool and Die Company, managed by David Yea in Hong Kong in 1952. Mr. Yea was destined to become owner and CEO of Universal Matchbox Toys. Marx established his factory and marketing company in the United Kingdom in Swansea, England about 1939. Richard Beecham managed the business for Marx.

About the time of Hong Kong, Marx also established Plastimarx to manufacture and distribute Marx Toys in Mexico, by shipping the tooling to the downtown plant on Aviacion Street, in the Industrial section of Mexico City. Marx was established with the Diez-Barreiro family. By this time in the 1950s, Louis Marx and Company was operating 3 huge manufacturing plants in the U S A. The Erie, Girard, and Glendale plants employed over 8000 full time domestic workers. Marx also was producing from plants in England, Japan, Hong Kong, and other countries. The sheer volume of products manufactured and the international presence of Louis Marx & Co. heralded its emergence as indisputably the world’s largest toy company.

Louis Marx, (as did Mr. Hershey) prided himself with high growth and profitability (he never failed to take a discount), without spending frivolously (he said that he had an advertising budget of $300) on advertising. This was the 1950s.
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Jay Horowitz book : Marx Western Playsets, The Authorized Guide

Booming 1960s
During the 1960s, Marx, picking up on the successful marketing by Mattel, Remco, and Ideal began to accept TV advertising as a legitimate marketing tool. He came in with a bang with one of the all-time great toy products “Rock-Em, Sock-Em Robots”, and a TV Commercial featuring the Heavyweight World Champion, Rocky Graziano (see TV Commercials). Marx finished the decade in 1969 by releasing the all-time greatest ride-on toy: THE BIG WHEEL. "By Marx" hit again!
Changing Times
When Mr. Marx reached his 70s and his second generation had not taken over the company, it was time to consider an exit strategy. He said, “Toys is a young man’s business”. At that time, Mattel was quickly catching up with Marx in sales. After flirting with RJR on the private sale of the company, they quickly consummated a deal with Quaker Oats to sell the U. S., Hong Kong and Mexican divisions for the sum of 52.8 million dollars! Marx disposed of the other branches privately. Following compliance with the terms of the agreement, Mr. Marx remained available for consulting for 6 months and then was honorably discharged.
At about the same time, Quaker Oats purchased the smaller pre-school toy company known as Fisher-Price and consolidated operations. What worked for one, did not necessarily work for the other. It was the time of President Nixon, Watergate and Viet Nam; Quaker did not feel that the Marx Military product line fit in with the overall wholesome Quaker Oats image. By immediately discontinuing the line, it cut Marx’s revenue without replacement. Furthermore, the Quaker management raised the Marx overhead considerably. After 52 years of consistent profit, Marx Toys under Quaker took a loss. Quaker never got the feel to manage Marx Toys, and after 3 years of mismanagement put the company up for sale.
Poetically, in 1975, Marx Toys was sold to Richard Beecham, the British Marx manager at a huge loss ($52.800,000 cash purchase, and sold for $15 million LBO). They operated under the name Dunbee-Combex-Marx, and although Mr. Beecham, with the talent of Larry Passick, Bob McDarren and Barry Piels, tried hard to turn it around, it was too far-gone.
In 1980, Louis Marx filed for bankruptcy in United States Federal Court, Southern District of New York. During the legal procedure, the assets were awarded to the Chemical Bank of New York as the preferred creditor in 1982. The Chemical Bank hired David Strauss & Company as the liquidator, who in turn contacted American Plastic Equipment, Inc. to purchase all of the non-real and financial assets. American Plastic was interested in obtaining the intellectual property rights and steel product molds, and therefore purchased all of the assets in order to obtain the molds.

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Page updated 4 February 2011