American Bicycle Company

Product Details

Historical Context

The American bicycle industry did not truly take off until the 1890s. In 1890, American companies built about 30,000 bikes. By 1892 that number had doubled to 60,000, with Colonel Albert A. Pope's Pope Manufacturing Company making about a third of the units. Just two yeats later, production had reached 100,000.

Then, as the impact of the economic depression that began in 1893 subsided, a new boom hit the industry. Five thousand people rode their bikes to work every day in downtown Chicago. Production rose to over 400,000 in 1896 and then to more than 900,000 a year in 1898 and 1899.

With this big rise in popularity, the bicycle manufacturers, often led by Colonel Pope, fought local laws limiting when and where bicycles could be ridden on city streets. The makers also lobbied for better roads and more paving, years before the automakers joined the fight. Pope continued to invest in the business, building a new headquarters, expanding factories, and adding plants to make steel tubing and tires. He fought many patent battles in his efforts to dominate the industry. Colonel Pope also developed a fabulous estate for his family outside Boston.

At the same time, the ever adventurous and increasingly rich Pope, with major east coast investors including the well-known Whitneys, got into the booming electric car industry, becoming a significant producer.

The 1890s, like the roaring 1920s and the conglomerate era of the 1960s, was a time of many big business deals and mergers. John D. Rockefeller’s Standard Oil Trust inspired other business leaders to consolidate their industries in order to eliminate competition and “rationalize” the industry. “Trusts” were formed in industry after industry.

Baseball player, manager, and sporting goods entrepreneur A.G. Spalding, backed by eastern capitalists, decided the bicycle industry was ripe for the creation of a bicycle trust. In 1899, this group formed the American Bicycle Company (ABC), made up of about fifty companies which produced at least 60% of the bikes in America. The company was formed as a New Jersey entity. The idea was to buy these companies up with stock rather than cash. But it turned out that many bike makers feared that bikes were just a fad, as they had been thirty years earlier, and wanted out of the business. So they demanded cash. In the final event, the sellers got some cash and some securities, but the company was heavily in debt because it had to come up with more cash, which proved difficult.

Colonel Pope sold his company to the new ABC bicycle trust, receiving some cash but also a lot of the riskier stocks and bonds.

Then, almost as suddenly as it had risen, the bicycle fad crashed. By 1904, total US bike sales dropped 75% to 250,000. The American Bicycle Company was broke, dropping from a three-million-dollar annual profit at its peak to zero, with tons of debt on its balance sheet. The securities held by Colonel Pope and the other bicycle makers approached worthlessness. In 1903, the Colonel stepped in, re-negotiated the capital structure of the company, and took control. He renamed the American Bicycle Company the Pope Manufacturing Company, which continued to produce bicycles and re-entered the car business with the Pope-Harford and Pope-Toledo automobiles.

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