In a stroke of ultimately unfortunate coincidence one day in 1952, while Gordon Varney sat in his office musing over mounting losses in his toy train line, his somewhat ne'er-do-well nephew Bob Varney wandered in looking for work. It seems that R. J. Reynolds Tobacco Company had recently canned him after discovering irregularities in his handling of the Prince Albert Tobacco accounts.
Gordon's ill fortune centered around sluggish sales of his cast zamak F3 locomotives, whose design was quite dated in comparison to the 14 other manufacturers offering F-units in HO scale at the time. His warehouse was stuffed with unsold F3's, as were several office broom closets and and a privy floor.
So, Varney Scale Models was tottering on the brink when Bob showed up. Although obviously unreliable, Bob was something of a marketing whiz and knew the tobacco business backwards and forwards. Gordon perceived this as no help to his own declining fortunes, and was about to give Bob the 86 when the latter suggested that they should form a partnership to produce cigarettes, adding that his connections would enable them to go into production with very little upfront money. Thus Varney Cigatette Company was born, overseen by Bob.
And Bob had a bold, albeit risky plan: target the largest untapped demographic: kids. These were different times. Bob figured that he could basically kill two birds with one stone by marketing cigs alongside toy trains. In this vein he proceeded to rebrand the Varney Docksider loco (whose name simply did not sing) as the Little Joe, whose name and likeness he slapped onto packs of their new line of Varney cigarettes.

Boys' Life Magazine, November 1952
The beauty of this arrangement in terms of advertising was that the same ad (as above) could run in both Soldier of Fortune and Boys' Life magazines. One of his particularly popular promotions awarded customers a free Little Joe with the purchase of ten cartons of cigarettes, although some restrictions applied.
Varney even ran TV ads for awhile. In those days, advertisers' products were often "embedded" in a program, rather than being hawked in standalone commercials. This Doody of thing worked out particularly well when Varney began inserting itself into the script of the Howdy Doody program. Sales immediately bumped up. "Oh honey, I just bought ten cartons of Little Joes so Johnny could have a new steam engine." Strangely, little backlash surfaced. Again, these were different times when nutritionists smoked heavily.
The several episodes featuring Varney centered around Buffalo Bob and Clarabell the Clown squatting on the stage floor coaxing a recalcitrant Little Joe (the loco, not the cigarette) around a loop of track as the kids in the Peanut Gallery OOed and AHHed on cue. Initially, packs of cigarettes sat on the floor adjacent to the two stars, but Bob (the Varney Bob) concluded that this was not providing sufficient cigarette exposure, so he - in a move that everyone soon lamented - convinced the show's producers to have Buffalo Bob and Clarabell puff on smokes as they played with the trains.