At age 20, Alfred Carlton Gilbert (born in 1884) entered Yale University Medical School and earned some extra money by performing on stage with magic shows. In 1908, he and John Petrie -a machinist who made props and had a mutual interest in magic shows- founded the Mysto Magic Company. They were producing and selling sets of magic equipment for the wholesale trade by 1909.
Gilbert did marketing & sales, while John Petrie manufactured the boxed sets. Gilbert bought out Petrie in 1911 and altered the direction of the firm, turning his interests toward the engineering & developing of toys. His Erector Sets were the first American (construction) toys with motors and moving parts.
The Erector Sets became an instant success, after introduction at the toy fairs of 1913, thanks to Gilbert's marketing skills. He promptly started publishing a series of advertisements in local & national papers and magazines.
The success was also due to the public's interest in construction during a big building boom in America. Originally priced from $1.00 to $525.00, Gilbert's new line of toys was awarded a gold medal at the Panama Pacific Exposition in 1915 and went on to sell more than 30 million units over the next 50 years.
Gilbert's company underwent major changes in 1916: It was renamed the A.C. Gilbert Company and moved to a five-block complex in New Haven, Connecticut. New products were also launched, including a line of pressed-steel cars and trucks and a line of educational scientific toys.
Also in 1916, Gilbert became the first president of the Toy Manufacturers of America, an organization set up by him to further the interests of American toy manufacturers after the embargo on German products was lifted following the war.
By 1938, Gilbert had taken over the American Flyer Corporation, relocating the entire operation from Chicago to New Haven. He re-designed the appearance and packaging of the trains, but kept the American Flyer name. Gilbert's marketing magic helped revive sales, and American Flyer once again competed with Lionel Trains, the market leader at the time.