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.[5] Ignaz's 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.[6][7] For the Aerocycle, F. W. Schwinn persuaded American Rubber Co. to make 2.125-inch-wide (54.0 mm) balloon tires, while adding streamlined fenders, an imitation "gas tank", a streamlined, chrome-plated headlight, and a push-button bicycle bell.[6][8] The bicycle would eventually come to be known as a paperboy bike or cruiser.
Schwinn was soon sponsoring a bicycle racing team headed by Emil Wastyn, who designed the team bikes, and the company competed in six-day racing across the United States with riders such as Jerry Rodman and Russell Allen. 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 competition bicycles. The Paramount used high-strength chrome-molybdenum steel 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 108.92 miles per hour (175.29 km/h) on a Schwinn Paramount bicycle[9] riding behind a car in Bakersfield, California.
