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Arnold, Schwinn and Company was founded in 1895 in Chicago, Illinois during the maturing years of the bicycle craze of the late 19th century, and went on to dominate US bicycle sales for many decades. The Schwinn name came from Ignaz Schwinn, who had immigrated from Germany only four years previously. He had been in the bicycle-making business for some time in Frankfurt and saw opportunity in the new world. The Arnold name reflected the money backing of Adolph Arnold and his Haymarket Produce Bank.

To give some perspective on the scale of the craze and the low bar to entry: At the time, the bicycle was the fastest means of personal transportation that didn't require the foresight to build a railroad prior to departing. Within a year of Schwinn's founding, there were at least 300 bicycle-making companies in the USA, of which 101 were in Chicago. Many people don't realize that after railroads and canals became prevalent in the 1840s, there was little incentive to maintain good long-distance cross-country roads in the United States...until the bicyclists started demanding them. Bicycle "traffic-calming" measures had to be introduced to protect vulnerable pedestrians and nervous draft animals from the speedy newcomers. Bicycling influenced fashion as well, prompting widespread adoption of Bloomers.

Schwinn applied many of the marketing techniques still in use in the automotive world, an "authorized dealer" network, marketing on radio and television, and changing models for pure style's sake (as well as ongoing innovation for safety, performance and specialization). Later bikes were even styled with lines like popular cars (eg the Sting Ray) or airplane looks. Purchasing Excelsior and Henderson lines, the combined brand was probably third in US motorcycle production, behind Harley-Davidson and Indian. These savvy moves, along with ready embrace of advances in mass production, addition of a professional engineering staff, and a focus on youthful customers for their pedal-powered division allowed Schwinn to survive the end of the bicycle craze when the industry consolidated in the years around 1910; Schwinn bought out Arnold in 1908. In 1916, Schwinn produced its millionth bicycle.

Following the market crash of 1929, Schwinn left the motorcycle business and Ignaz's son took over the company. F.W. Schwinn focused intensely on innovation in the company's bicycle lines, inventing and patenting many design features still popular today: front shock absorbers, cantilevered frames, and balloon tires, to name a few. Innovation in marketing was also swift, including the adoption of a lifetime warranty on the company's bike frames. The balloon tire improved the riding experience so much that Schwinn was catapulted into a dominant role in the US bicycle market within a year of its adoption in 1933. That was Schwinn's position right through the middle 20th century, as they adapted and diversified their product lines to please not just kids, but track racers and road racers.

Schwinn fell on hard times in the 1980s, when their young customers went in for cheaper TIG-welded bikes, as well as BMX and mountain bikes...while their older customers and racing base wanted lighter frames, trends that Schwinn had not anticipated or bought heavily into. They tried to catch up, merging with GT and outsourcing production to Giant in Taiwan. In 1983, the dated Chicago factory closed forever.

In 1992 the company filed for Chapter 11 bankruptcy protection, and the bulk of assets were sold in 1993 to Scott Sports Group. In 1997 the new group sold again, to a partnership of investors...and was back in bankruptcy court by 2001. On September 11, 2001, importer Pacific Cycle announced its acquisition of the bicycle-related assets of Schwinn/GT.

Nowadays there are Schwinn-branded bikes available for purchase in Chicago again (and most everywhere else in America, as Pacific markets through chains such as WalMart and ToysRUs besides the traditional bike shop channel) but they're all made in Asia now.
Sources:
http://www.schwinnbike.com/heritage/timeline.php
http://www.fhwa.dot.gov/infrastructure/bicycle.htm
http://www.pacific-cycle.com/news/news_detail.php?id=8
Pridmore, Jay and Hurd, Jim. Schwinn Bicycles. Motorbooks International, 1996. ISBN: 0-7603-0127-1
Crown, Judith and Coleman, Glenn. No Hands: The Rise and Fall of the Schwinn Bicycle Company, an American Institution . Henry Holt, 1996. ISBN: 0-8050-3553-2

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