Found a clearer picture of that catalog cover today. Batteries are marked "Red Seal". Looks like they're only powering the motorized carnival or whatever that is. I've seen that tunnel before but can't remember where.
That kid is operating the 1912 issued Lionel Race Cars with an early transformer that plugged into the ceiling light socket..like this :
I did find a different illustration that shows "Lionel" brand dry cells. Whether or not they were ever sold that way I'm not sure.
And a picture of a rare battery rheostat..