About Mr. Ignaz Schwinn was born in Hardheim, Germany in 1860 and worked on two-wheeled ancestors of the
modern bicycle that appeared in 19th century Europe. Schwinn emigrated to the United States in 1891,
where he found similar difficulties. In 1895, with the financial backing of fellow German American Adolph
Arnold (a meat packer), he started the Arnold, Schwinn & Company. Schwinn's new company coincided
with a sudden bicycle craze in America. Chicago became the center of the American bicycle industry,
with thirty factories turning out thousands of bikes every day. Bicycle output in the United States grew to
over a million units per year by the turn of the century.
The bicycle boom was short-lived, as automobiles and motorcycles quickly replaced bikes on American
streets. By 1905, bicycle annual sales had fallen to only 25% of that reached in 1900. Many smaller
companies were absorbed by larger firms or went bankrupt; in Chicago, only twelve bicycle makers
remained in business. Competition became intense, both for parts suppliers and for contracts from the
major department stores, which retailed the majority of bicycles produced in those days. Realizing he
needed to grow the company, Ignaz Schwinn purchased several smaller bicycle firms, building a modern
factory on Chicago's west side to mass-produce bicycles at lower cost. He finalized a purchase of
Excelsior Motorcycle Company in 1912, and in 1917 added the Henderson Company to form Excelsior-
Henderson. In an atmosphere of general decline elsewhere in the industry, Schwinn's new motorcycle
division thrived, and by 1928 was in third place behind Indian and Harley-Davidson.[1]
[edit] Depression years
At the close of the 1920s, the stock market crash decimated the American motorcycle industry, taking
Excelsior-Henderson with it. Arnold, Schwinn, & Co. (as it remained until 1967) was on the verge of
bankruptcy. With no buyers, Excelsior-Henderson motorcycles were discontinued in 1931.[1] Ignaz' son,
Frank W. "F.W." Schwinn, took over day-to-day operations at Schwinn. Putting all company efforts
towards bicycles, he succeeded in developing a low-cost model that brought Schwinn recognition as an
innovative company, as well as a product that would continue to sell during the inevitable downturns in
business cycles. After traveling to Europe to get ideas, F.W. Schwinn returned to Chicago and in 1933
introduced the Schwinn B-10E Motorbike, actually a youth's bicycle designed to imitate a motorcycle.
The company revised the model the next year and renamed it the Aerocycle.[2][3] For the Aerocycle, F.
W. Schwinn persuaded American Rubber Co. to make 2.125-inch wide balloon tires, while adding
streamlined fenders, an imitation 'gas tank', a streamlined, chrome-plated headlight, and a push-button
bell.[2][4] The bicycle would eventually come to be known as a paperboy bike or cruiser, and soon
became an industry standard as other makers rushed to produce imitations.
Schwinn was soon sponsoring a bicycle racing team headed by Emil Wastyn, who designed the team
bikes, and the company competed in 6-day races across the United States with riders such as Jerry
Rodman. In 1938, Frank W. Schwinn officially introduced the Paramount series. Developed from
experiences gained in racing, Schwinn established Paramount as their answer to high-end, professional
competitive bicycles. The Paramount used high-strength steel chromoly alloy tubing and expensive
brass lug-brazed construction. During the next twenty years, most of the Paramount bikes would be built
in limited numbers at a small frame shop headed by Wastyn, in spite of Schwinn's continued efforts to
bring all frame production into the factory.
On 17 May 1941, Alfred Letourneur was able to beat the motor-paced world speed record on a bicycle,
reaching 175 km/h (109 mph) on a Schwinn bicycle[5] riding behind a car on the Los Angeles freeway.
[edit] Industry dominance
By 1950, Schwinn had decided the time was right to grow the brand. At the time, most bicycle
manufacturers in the United States sold in bulk to department stores, which in turn sold them as store
brand models. Schwinn decided to try something different. With the exception of B.F. Goodrich bicycles,
sold in tire stores, Schwinn eliminated the practice of rebranding in 1950, insisting that the Schwinn
brand and guarantee appear on all products. In exchange for ensuring the presence of the Schwinn
name, distributors retained the right to distribute Schwinn bikes to any hardware store, toy store, or
bicycle shop that ordered them. In 1952, F.W. Schwinn tasked a new team to plan future business
strategy, consisting of marketing supervisor Ray Burch, general manager Bill Stoeffhaas, and design
supervisor Al Fritz.
In the 1950s, Schwinn began to aggressively cultivate bicycle retailers, persuading them to sell
Schwinns as their predominant, if not exclusive brand. During this period, bicycle sales enjoyed relatively
slow growth, with the bulk of sales going to youth models. In 1900, during the height of the first bicycle
boom, annual U.S. sales by all bicycle manufacturers had briefly topped one million. By 1960, annual
sales had reached just 4.4 million.[6] Nevertheless, Schwinn's share of the market was increasing, and
would reach in excess of 1 million bicycles per year by the end of the decade.
In 1946, imports of foreign-made bicycles had increased tenfold over the previous year, to 46,840
bicycles; of that total, 95 per cent were from Great Britain.[7] The postwar appearance of imported
'English racers' (actually three-speed 'sport' roadsters from Great Britain and West Germany) found a
ready market among U.S. buyers seeking bicycles for exercise and recreation in the suburbs.[8] Though
substantially heavier than later European-style 'racer' or sport/touring bikes, Americans found them a
revelation, as they were still much lighter than existing models produced by Schwinn and other American
bicycle manufacturers. Imports of foreign-made 'English racers', sports roadsters, and recreational
bicycles steadily increased through the early 1950s. Schwinn first responded to the new challenge by
producing its own middleweight version of the 'English racer'. The middleweight incorporated most of the
features of the English racer, but had wider tires and wheels.[9]
The company also joined with other U.S. bicycle manufacturers in a campaign to raise tariffs across the
board on all imported bicycles.[10] In August 1955, the Eisenhower administration implemented a 22.5%
tariff rate for three out of four categories of bicycles. However, the most popular adult category,
lightweight or 'racer' bicycles, were only raised to 11.25%.[10] The administration noted that the U.S.
industry offered no direct competition in this category, and that lightweight bikes competed only
indirectly with balloon-tire or cruiser bicycles. The share of the US market taken by foreign-made
bicycles dropped to 28.5% of the market, and remained under 30% through 1964.[11] Despite the
increased tariff, the only structural change in foreign imports during this period was a temporary decline
in bicycles imported from Great Britain in favor of lower-priced models from Holland and Germany. In
1961, after a successful appeal by bicycle importers, the Eisenhower tariffs were declared invalid by the
Court of U.S. Customs Appeals, and President Kennedy imposed new a new tariff rate at 50% on foreign-
made bicycles, a rate which remained in place until 1964.[10]
While every large bicycle manufacturer sponsored or participated in bicycle racing competition of some
sort to keep up with the newest trends in technology, Schwinn had restricted its racing activities to
events inside the US, where Schwinn bicycles predominated. As a result, Schwinns became increasingly
dated in both styling and technology. By 1957, the Paramount series, once a premier racing bike, had
atrophied from a lack of attention and modernization. Aside from some new frame lug designs, the
designs, methods and tooling were the same as had been used in the 1930s. After a crash-course in
new frame-building techniques and derailleur technology, Schwinn introduced an updated Paramount
with Reynolds 531 double-butted tubing, Nervex lugsets and bottom bracket shells as well as
Campagnolo derailleur dropouts. The Paramount continued as a limited production model, built in small
numbers in a small apportioned area of the old Chicago assembly factory. The new frame and
component technology incorporated in the Paramount largely failed to reach Schwinn's mass-market
bicycle lines. Another change occurred in 1963 following the death of F.W. Schwinn, when grandson
Frank Valentine Schwinn took over management of the company.
By the mid-1960s, Schwinn's exclusive marketing practices were well entrenched in the United States,
practices that had ensured a dominant position in the US bicycle market. However, Schwinn's
distributors continually balked at restrictions the company put on their ability to market Schwinn bicycles
to shops outside the Schwinn network. In a ten-year legal battle, many of Schwinn's practices were
upheld by the courts: judges ruled they had the right to have their bicycles sold by retailers equipped to
service the bikes as well as sell them. However, in a decision by the US Supreme Court in 1967, Schwinn
was found guilty of restraint of trade by preventing distributors shipping bicycles to unapproved dealers.
The company stopped working solely through independent local distributors and constructed four
regional warehouses from which bicycles would—legally—be sent to shops. While this solved the
problem of unfair trade practice with the courts, the new distribution system made it more difficult for the
company to stay informed of customer complaints regarding manufacturing or assembly problems.
[edit] Children and youth markets
During the 1960s, Schwinn aggressively campaigned to retain and expand its dominance of the child
and youth bicycle markets. The company advertised heavily on television, and was an early sponsor
(from 1958) of the children's television program, Captain Kangaroo. The Captain himself was enlisted to
regularly hawk Schwinn-brand bicycles to the show's audience, typically six years old and under.[10] As
these children matured, it was believed they would ask for Schwinn bicycles from their parents. By 1971,
U.S. government councils had objected to Schwinn's marketing practices. In response, Schwinn had
Captain Kangaroo alter its format. The Captain no longer insisted that viewers buy a Schwinn, but
instead made regular on-air consultations of a new character, 'Mr. Schwinn Dealer'.[10]
21st century Sting Ray