Wm. K. Walthers, Inc., was founded in Milwaukee in 1932, but really, it started years earlier, when 7-year-old Bill Walthers got his first taste of the hobby with a little wind-up toy train for Christmas. He continued with the hobby and eventually had an attic layout comprised primarily of his own scratch-built creations. After he wrote a series of articles on building train control and signaling systems, he got so many letters from other modelers that he began manufacturing them. The first ad (in the May issue of The Model Maker) offered a 24-page, 15¢ catalog that listed rail, couplers, and electrical supplies. Sales were over $500.00 for the first year, and the fledgling company was off to a strong start.
Within five years, Walthers had grown so much that larger quarters were needed. Space was found on Erie Street, where everything - from milled wood parts to metal castings to decals - was made in-house. 1937 also saw a new line in HO Scale, featured in its own catalog. Bill brought operating layouts to the 1939 World's Fair, which gave the hobby a big boost. Soon, though, the growing possibility of war overshadowed these successes, and supplies were becoming increasingly difficult to obtain.