Choosing not to pursue a medical career, Gilbert co-founded Mysto Manufacturing, a manufacturer of magic sets, in 1907. This company later became the A. C. Gilbert Company. Gilbert developed the Erector Set, a construction toy, in 1913. His inspiration was steel construction girders used on the New York, New Haven & Hartford Railroad. In 1918, with the United States embroiled in World War I and the Council of National Defense considering a ban on toy production, Gilbert argued successfully against it. The press gave him the nickname "The man who saved Christmas." By 1935, he had sold more than 30 million of the sets. He also added chemistry sets, microscope sets, and other educational toys to his product line, accumulating more than 150 patents during his 50-year career. In 1938, he acquired the rights to the American Flyer toy train line from W. O. Coleman and moved their production from Chicago to New Haven. At the same time, he adopted a 3/16 scale for this train line while keeping the three-rail O-gauge track now associated with Lionel. Following World War II, O-gauge track was abandoned in favor of two-rail S-gauge track. Gilbert was lauded for his adherence to scale realism, making American Flyer trains look more real and less toylike. Gilbert is credited with originating the concept of providing benefits for his employees, co-founded the Toy Manufacturers of the U.S.A. trade association and was its first president. Frustrated that invention was an important part of American society not taught in schools, in 1941 Gilbert opened the Gilbert Hall of Science in New York City, a science and technology museum. It served the dual purpose of promoting interest in science and selling Gilbert's products. In 1950–1951 he marketed the Gilbert U-238 Atomic Energy Laboratory, which contained radioactive ore samples.
Personal life
In 1908, he married Mary Thompson, whom he had met at Pacific University. They had three children: two girls and a boy.
Later years
Upon his retirement in 1954, Gilbert turned his company over to his son. The same year, he published his autobiography, titled The Man Who Lives in Paradise. After his death in 1961, the family sold its remaining shares in the A. C. Gilbert Company to Jack Wrather. It went out of business six years later.
Legacy
A museum in Gilbert's birthplace of Salem, Oregon, A. C. Gilbert's Discovery Village, is named in his honor. The museum comprises several historic structures, including the house of Gilbert's uncle Andrew T. Gilbert. It opened in 1989. A biography titled The Man Who Changed How Boys and Toys Were Made was published in 2002. The television movie The Man Who Saved Christmas is a dramatization of Christmas during the years 1917 and 1918 when America was involved in World War I. He was portrayed by Jason Alexander. The film takes several historical liberties. It debuted December 15, 2002. Pacific University in Forest Grove, OR, has a residential hall named after him that was opened in 2009.