The eighth of nine children of Jewish immigrants and a college dropout (he enrolled both at Columbia University and the City College of New York), Cowen received his first patent in 1899, for a device that ignited a photographer's flash. The same year, Cowen received a defense contract from the United States Navy to produce mine fuses that netted him $12,000. The following year, Cowen and one of his partners founded Lionel Corporation in New York City.
Cowen had built his first toy train at age 7, attaching a small steam engine to a wooden locomotive he had carved. The engine exploded, damaging his parents' kitchen. Cowen also accidentally invented the flashlight in 1898, attaching small canisters containing batteries and light bulbs to a flower pot for the purpose of illuminating the plant. The invention was a flop, and Cowen sold the rights to the invention to Conrad Hubert, who decided to try selling the lights without the flower pot. Dubbed the Eveready Flashlight, it became a resounding success that made Hubert a multimillionaire.
Cowen sold his first electric train in 1901 to a store owner in Manhattan, intending to use the train to call attention to other merchandise. The store owner returned the next day to order six more trains, because customers wanted to buy the store display. By 1902, Lionel was primarily a toy train manufacturer.
Although Cowen often gave his birthdate as 1880, he was actually born three years earlier, and Cowen changed the spelling of his last name from the original Cohen in 1910.
Cowen's marketing skills ultimately made him more money than his skills at invention. The tradition linking toy trains to Christmas began with Cowen, who in the 1920s convinced the owners of large department stores to incorporate elaborate train setups around their large Christmas tree displays, hoping to fuel demand among small boys for toy trains as Christmas gifts. Lionel was soon the largest of three American toy train manufacturers, and for a short time in the early 1950s, Lionel was the largest toy manufacturer in the world. However, by the mid-1950s, public interest had shifted from trains to airplanes and automobiles.
Disillusioned with the fading popularity of toy trains, Cowen retired in 1959, selling his 55,000 shares of Lionel stock to his great-nephew Roy Cohn. He died in 1965, making no mention of his legacy on his tombstone.