William Hafner (Chicago, Illinois), decided to produce toys in 1900 and at the start his firm: 'the Toy Auto Company', focused mainly on the production of (clockwork) model cars.
Hafner's creations reflected the advances in technology during those years, and clockwork mechanisms became the consistent component in all the pieces he manufactured. But the company struggled with the production and distribution of its products. In 1904, the name was changed to the WE Hafner Company.
Facing mounting financial troubles, Hafner entered into a partnership with Wiliam Coleman, a Chicago hardware store owner, in 1910. They focused the business on the production of clockwork trains and renamed it American Flyer. Four years later, Hafner formed a rival company, called Overland Flyer, to compete with the original company he had founded 14 years before.
American Flyer began experimenting with different products to compete with other manufacturers of the time. In 1928, in addition to the successful train line, the company designed four different styles of mechanical airplanes, the Spirit if Columbia, Lone Eagle, Spirit if America, and Sky King. But in 1931, the company dropped the airplanes from its line and refocused on the production of trains, gradually establishing itself as one of the leaders in the toy train market. The trains continued to be popular until the mid-1930s.