In 1937 the Cleveland Model & Supply Company C-D) were manufacturers of wooden airplane kits, but decided to enter the model railroad market. Their scale chosen was 3/16" to one foot on a 7/8" track gauge for a 1:64 ratio, and was marketed as 'C-D' gauge. The designation "S Gauge" originated at a National Model Railroad Association Convention held in the summer of 1943 where names of various gauges were officially adopted by a committee. Legend has it that Al Kalmbach noticed the repetition of S in the sixteenths and 'sixty-fourths' and suggested that "S" be adopted at that convention. As the legend further goes, it was hot and getting late and the committee wanted to hit the tavern for a cold beer so "S" it was and the meeting ended.
A. C. Gilbert Co. purchased the Chicago firm American Flyer in 1936 but did not use the designation until 1946 when they introduced their two rail S Gauge line, most of which had been re-gauged from their "3/16ths - 0 Gauge" line, introduced in 1939 after most of the Standard and 0 Gauge inventory acquired from the Chicago company had been depleted. Gilbert continued "S" production until the company failed in 1968, whereupon the Lionel Corporation acquired the name, tooling and most of the remaining inventory. Hobby Surplus Sales bought much of the parts and unfinished inventory