The first stuffed toy to be called a "teddy bear" was introduced in 1903 by Morris Michtom who created a stuffed bear to commemorate an incident in which President Theodore "Teddy" Roosevelt had refused to shoot a young bear during a hunting trip. Michtom’s teddy bears were enormously popular and formed the basis for the creation of the Ideal Toy Corporation. 

The credit for creating the teddy bear must, however, be at least equally shared by Margarete Steiff, a German polio victim who made stuffed toys as part of her dressmaking business. In 1902, she decided to try to sell a few stuffed bears that she had made including a bear designed by her son, Richard. They were so successful that, by 1908, the Steiff factory was selling well over a million bears a year.

In the early 1930s, the Chicago printing company, Dowst, developed a technology for casting lead alloys for typesetting. As a sideline, Dowst produced some small, inexpensive die castings of toy cars which were sold as Tootsie Toys. 

In 1933, the British company Meccano, which was had been making making Meccano sets since 1901 and Hornby electric trains since 1927, took up the idea and introduced a range of Modelled Miniatures. In the following year, these were renamed Dinky Toys. The first Dinkies were made of lead alloy. As a result they are very prone to breakage from metal fatigue and, so, are very rare. Up to the Second World War, Dinkies usually had dished wheels, smooth rubber tyres, tinplate radiators and solid underframes. Very few Dinkies were produced during the War Hornby was taken over by Triang in 1961 and continued to make Dinkies until 1979.

The outstanding examples were produced in Germany from the 1890s until the Second World War with the leading  manufacturers being Bing and Marklin. Bing produced a wide range of toys tailored for different markets (for example, a toy gunboat sold in Germany as the Brandenberg, in Britain as the HMS Terrible and in America as the New York) and for different times (for example, when a new stye of bus was introduced in a city, Bing would release a toy model of it). Until 1923, Bing toys are marked GBN (Getbruder Bing, Nuremburg), later toys are marked BW (Bing Werke). Bing ceased production during the Depression in 1932.