Oswald was born in the month of December to the Cobblepots, a family of wealthy Gothamites. His parents were Tucker and Meredith. Or at least it was so believed. The two were horrified when they saw that their child was born deformed with grey-ish white skin, several fingers melded together on each hand to look like flippers, wiry black hair, and a long pointed nose. Despite this the two tried, but decided to keep it a secret for the time being. But Meredith had a dark secret. What Tucker did not know was that their child was the product of a long-running incestuous affair between Meredith and her brother Paul Burgess. That being the reason for his radical deformity. Tucker a couple of weeks after Oswald's birth heard from an eavesdropping servant that Meredith and Paul were talking about how they knew that the child was his. When Tucker learned this he made a radical decision and with Meredith took Oswald in a carriage to the old abondoned Gotham Zoo and threw his basket off of a bridge and into a river that flowed into Gotham's sewers. Tucker believing that he had gotten rid of the blemish on his family legacy.
Oswald's carriage flowed beneath the Arctic World exhibit where he was found by a group of penguins that had been left behind. As fate would have it he would be discovered again. Haley's Circus arrived in Gotham around that time, and a seven year old freakshow performer named Waylon Jones was exploring the sewers of Gotham and came across the baby Oswald and took him back to the circus with him. Feeling that he had found a kindred spirit.
Oswald was raised at Haley's Circus and joined the freakshow with the name Penguin, befriending it's members that included Waylon (The Killer Croc), the contortionist Peter Merkell (Rag Doll), the oversized and emotionally unstable strong man Aaron Helzinger (Amygdala), the schizophrenic hypnotist Ira Billings (Spellbinder), and a lesbian fortune-teller named Natasha Night (Nocturna). All of whom in one way were mistreated and ostracized by society for being different. Ever since he found him Croc became Oswald's surrogate brother who looked out for him. The freakshow performers were often bullied and abused by their fellow circus-mates. He however did befriend a young girl who was a member of an acrobat family working for the Circus named Mary O'donnell. She had sympathy for the young Oswald and they became good friends. And because of her kindness and beauty Oswald found himself falling in love with her. Oswald sought the education to become a distinguished gentleman in order to impress Mary. He got it from and old circus book keeper named Jacques, one of the only non-freakshow circus performers who showed sympathy for Oswald. And over the next couple of years managed to get a strong education including fencing lessons, but never mustered up the courage to try and start a romantic relationship with Mary. And also under Jacques' tutelage kept a journal to work on his writing. Eventually a teenage runaway with an attitude named John Grayson arrived at the circus. He became smitten with Mary and they eventually started dating, and unknown to her he also joined in the bullying of Oswald. Unknown to anyone it was actually because he was jealous and afraid of Oswald. John having always been a punk who was ignorant of and struggled schoolwork and authority was jealous of Oswald's intellect and more cultured demeanor despite his physical deformity. He worried that Mary would actually accept that over John's physical talents and good looks. Eventually John managed to find Oswald's journal and learned of Oswald's romantic feelings towards his girlfriend. He showed all his friends, including Mary, the journal and everyone began to laugh at him. Mary did not know how to react, both her and Oswald feeling emberassed because of the situation. Oswald confronted John about it and after a heated argument a fight began and in his rage Oswald knocked John unconscious. His friends shortly thereafter learned of what had happened and attacked Oswald. During the beating Oswald managed to see Mary find them run away, and was shattered when no help arrived from her. Things going out of hand and Oswald was beaten to near death. Eventually Croc arrived and scared off the bullies. Croc took Oswald back to the freak show's quarters, and when he woke up Penguin tried to find Mary only to discover that she refused to talk to him. Unknown to him out of guilt. Penguin returned to his fellow freak show performers with a new drive and hatred inside of him. He shared with them a plan to get revenge upon society for how they were treated. And together they ran off to Gotham to begin their mission, as Penguin also sought to discover the truth about his past.
And thus the Red Triangle Circus Gang was born. They established their headquarters where Croc had found Penguin all the years ago in the Gotham Zoo. There they remained in hiding, and established themselves as a criminal ring in Gotham. They took in and took in and kidnapped street kids and runaways, and raised them in their lifestyle. Convincing them that like the gang themselves, they couldn't be understood or accepted by society. Dressing them up to fit their circus motif. Killer Croc was the one who according to the spreading word was the leader of the gang, as a part of the Penguin's plan. They began a crime wave in Gotham, brining them into conflict with Batman. They eventually hatched a plan to kidnap the mayor, Hamilton Hill. They managed to succeed in doing this. A couple of days into his captivity Penguin, who had kept himself hidden from the mayor during the captivity, showed up pretending to be just a sewer dweller with no affiliation with the gang and frees him and then proceeds to lead him out.
And thus the Penguin then became considered a hero to Gotham. Penguin claimed that all he wanted was to learn about his past.