Choosing an Era is crucial, as nothing existing after that date should ever appear on the layout.
Season is important as it affects rail traffic, especially of farm commodities. Winter is best avoided, unless modeling a part of the country without snow (elsewhere on the layout is okay, but modeling snow or rain on the trains themselves is strongly discouraged). Autumn may be the ideal season for a model railroad, due to it being the harvest season, and also due to businesses stockpiling for the winter.
Although trains from between approximately The Spanish-American War [EXAMPLE] and The Great War [EXAMPLE] are of an ideal length, traffic level, and operations sophistication for O-scale 3rail model railroading, until recently (except in the case of Traction) there has been a limited amount of 3rail R-T-R equipment available to modelers reflecting the time periods from before the nationalized United States Railroad Administration. Most 3rail R-T-R equipment reflects either gigantic equipment from the present day, or northeast coast fallen-flag Class-1 equipment from the steam to diesel Transition Era of the nineteen fifties.
However because modelers have the ability to be Freelancers, they can believably modify reality slightly (e.g., assume Pipelines, Airlines, Trucks, and Busses no longer receive unfair government dispensation, and must compete with your railroad on a level playing field) to create a railroad tailored specifically to their taste. It would behoove Freelancers deciding on a Time/Location to also be different from the typical O-scale 3rail modeling crowd. This means avoiding the entire 50s transition period of about '42-'59 (an impractical O-scale era to wedge into todays smaller train rooms), not modeling mountains (including Horseshoe Curve / Tehachapi Loop themed layouts), and especially not making your featured roadname be the heavily over-modeled Pennsylvania, Santa Fe, Union Pacific, or Rio Grande railroads (prime target railways for nit picking critics).
Excellent Eras to consider are:
1- the Merger Era of around 1982 [ESSAY] - {freedom from ancient regulations, breakups and mergers, an explorative mishmash of old and new methods, and regional passenger service having serious resurgence potential}.
2- the Kennedy Era of around 1962 [EXAMPLE] - {now shorter passenger trains, most freight cars not yet lengthened, more powerful 2nd generation diesels, and still many smaller and diverse rail customers}.
If you insist on running Steam, consider:
3- a Pre-GreatWar Era Regional Railroad of around 1916 [EXPLANATION] - {smaller firebox steam locomotives, ubiquitous passenger traffic, short colorful freight cars, and interactions with competitive electric railways}.
If you are after that feel of friendly small business operations, consider:
4- a Shoestring Contemporary Era Short Line of around 2016 [EXAMPLE] - {casual switching service within suburban surroundings, refurbished motive power, and huge interchange cars appearing in just ones and twos}.
Although once a popular era, there are several excellent reasons to avoid the 50s Transition Era. Because there is both Steam and Diesel on the rails, there will be duplication of fueling/maintenance facilities (one for Steam and one for Diesel), which will consume a lot a precious layout real estate. Rarity of radio makes real-time communications difficult. Another big reason is the problem of passenger car heating and cooling:
In Cold weather, older passenger cars (which railroads often kept in service for a long time) utilized steam heat from the locomotive, so all Diesel engines used in cold weather passenger service had to be the lengthened ones that contained a steam generator, or had to haul a special steam generator car (both of which require obtaining water). This forces longer O-scale passenger trains (a space problem in O-scale), and poses a logistics problem. Modern, and expensively retrofitted, passenger cars now utilize electricity (Head End Power) for heating, eliminating this problem as diesel passenger locomotives have, and diesel freight locomotives can be fitted with, HEP generators (Steam locomotives though will now be the ones to have issues).
Hot weather also poses logistics issues, as non-retrofitted passenger cars (such as older Business/Private cars) will still utilize Ice for cooling (requiring the making and storing of Ice). Modern and retrofitted passenger cars now use electrically powered Air Conditioning; which means that all Steam locomotives and freight diesels in summer passenger duty will either have to be equipped with a HEP generator, or haul a special HEP generator car.
Another consideration is the region [EXAMPLE] of the country that the railroad will be located in, as this affects landscape look, weather defense, structure style, and commodity options. Within your chosen region will also be several competitors and friends [EXAMPLE], vying for your railroads customers. Because it has been done to death, you should consider avoiding the North East Rail Corridor, and instead try something offbeat, like Canada.
Note that although modeling rugged mountainous terrain was once popular, prototype railroads actually do everything they can to keep away from mountains (so it would be too costly and unprototypical for them to tunnel through that ridiculous mini-mountain [EXAMPLE] in the corner of your layout, as they would either make a deep cut [EXAMPLE], or most probably simply relocate the track elsewhere).
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