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The Schwinn Balloon Tire Era
1896-1930s
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Arnold, Schwinn & Company began experimenting with the horseless carriage
(automobile) as early as 1896. They continued building prototypes through
1905, but nothing was ever put into production. Ignaz put his engineers to
work designing motorcycles. Rumor has it that revolutionary designs were
almost entirely complete when Excelsior Motor Manufacturing & Supply Company
of Chicago declared bankruptcy. In 1911 Schwinn paid a half million dollars
for the struggling Excelsior and started building motorcycles. The
Excelsior did well and in 1914 Schwinn built the largest motorcycle factory
in the world right in the middle of Chicago. In 1917 Schwinn purchased the
ailing Henderson Motorcycle Company of Detroit and moved it to Chicago.
Schwinn was suddenly ranked among Harley-Davidson and Indian in motorcycle
manufacturing. They were the third largest motorcycle manufacturer in the
country. Bicycle sales became an afterthought for Ignaz Schwinn.
The 1920s was not exactly the decade of the motorcycle, but Schwinn did well
enough. Unfortunately he also did plenty of speculating on the stock
market. Schwinn and company were hit hard by the crash of 1929 and by 1930
Schwinn had combined their R&D departments for bicycles and motorcycles. It
didn't help. The Great Depression looked very bleak as the American economy
came to a grinding halt. With shrinking margins and no prospective buyers
in 1931, Excelsior-Henderson simply ceased production. Ignaz, 71, retired.
Or rather, Ignaz Schwinn, German immigrant and bicycle mogul slowed down
about as much as he was able to tolerate. His son Frank W. began running
the daily operations as Vice President, but Mr. Schwinn continued to have
final say on major investments. Ignaz was the public image of Schwinn and
he retained the title of President for 17 more years.
Frank W. Schwinn, 36, turned his attention back to bicycles. Manufacturers
had become little more than middlemen, assembling components as a bike made
its way from parts makers to the big department stores. Most bikes carried
the name of the retailer rather than the manufacturer. At one point,
Schwinn was putting more than 100 different head badges on their bikes.
Bicycles had become toys and the department stores selling these toys merely
asked for lower costs. Moreover, children did not demand performance in the
way that their parents had. Cost cutting became the rule, rather than
innovation. Ignaz didn't make toys and Frank W. didn't want to. Besides,
Schwinn had idle motorcycle engineers to put to work. They came up with a
wider tire (actually, they borrowed it from Germany where the "balloon tire"
was taking on cobblestone roads quite successfully).
As the bicycle industry crumbled under the weight of the Depression, Schwinn
forged on ahead. Frank W. successfully played suppliers off of one another
in order to get someone (Firestone) to make rims that would fit a wider
tire. And he had to order enough tires (10,000) to make it worth Fisk
Rubber's time to make a custom 2 1/8 inch wide balloon tire. Frank W. was
determined. Schwinn released the first balloon tire bikes in 1933, a tire
that could roll over broken glass without a thought. In 1934, the Schwinn
Aero Cycle-designed after an airplane fuselage-had a tougher frame and cost
double what the competition was charging. Furthermore, it was designed as a
thing of beauty. Its styling (a word not used when discussing bicycles up
to then) made bicycle esthetics as much of a selling point as performance.
The department stores, where most bicycle sales took place, wanted nothing
to do with the high-end ride. Schwinn got the Chicago Cycle Supply Company
to distribute the new bicycle and told them not to sell to the department
stores.
Frank W. was looking ahead. He had grand ideas for bicycles and he planned
to lead the way. He gave the underdogs something exclusive. Schwinn gave
the independent dealers-used to getting the scraps from the department
stores-something the mass merchant sellers didn't have access to. And they
returned the favor in spades. In 1932, the industry put out 194,000
bicycles into the U.S. In 1934, Schwinn sold 86,000 units by itself. In
1935 Schwinn put out 107,000 units. Schwinn broke 200,000 in 1936.
Schwinn began fostering relationships with independent dealers, something
that would bring impressive sales, but it would also help carry Schwinn
through the lean times. And by the 1940s, production had reached almost
350,000 units annually. Schwinn had breathed new life into an old product.
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