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A diamond for Christmas.

A Diamond for Christmas

Christmas Eve, 1890. Alvin Peterson Hovey was Indiana's governor. Indianapolis had a new Union Station, a new state capitol building and upwards of 100,000 people. The popular song of the day was "Bicycle Built for Two." Membership in the League of American Wheelmen was more than one million strong, and anyone who pedaled a bicycle more than 100 miles in a day was an instant celebrity in his own land.

Christmas Eve, 1890. It seems an unusual time to launch a new business, when everyone else was exchanging Yuletide greetings and placing presents under the tree, but three entrepreneurs--Arthur C. Newby, Edward C. Fletcher and Glenn Howe--didn't think so. It was on Dec. 24 of that year that they decided to cash in on the bicycle craze. With a $5,000 investment, they started a new company to manufacture bicycle chain in Indianapolis. The trio selected the diamond as the company's trademark, because the diamond symbolized perfection. Their name for the new enterprise was the Indianapolis Chain & Stamping Co. Today, after undergoing several name changes, that company is known as the Diamond Chain Co.

Christmas Eve, 1990. Diamond Chain will celebrate the 100th anniversary of its founding. The company, where 550 are employed, still calls Indianapolis home, though it is no longer home-owned. Today, it is a division of Chicago-headquartered AMSTED Industries Inc., a diversified manufacturer of products for the construction, mining and transportation industries, whose predecessor, American Steel Foundries Inc., acquired Diamond Chain in 1950.

The Indianapolis Chain & Stamping Co. went into business with four machines and four operators in rented rooms of a tinner's shop on South Street. Its sole product was a figure-eight chain. By 1892, the demand for bicycle chain had increased to the point where the company's original quarters were no longer adequate, so the operation moved to the third floor of a laundry that furnished the steam to power its machinery.

During this decade, the company took another giant step forward with the manufacture of a high-strength, heat-treated block chain. The demand for the product was so great that three years later, the company again had outgrown its quarters. In 1895, it built its own factory, historically called the "Old Building," at the site of what is now the playing field of the Hoosier Dome. It had 500 people on hire, a large number of whom were women.

In 1899, one of the first U.S. conglomerates, the Cleveland-based American Bicycle Co., purchased Indianapolis Chain & Stamping and sent a former Hoosier, Lucius Wainwright, to Indianapolis to be the general manager of what was renamed the Diamond Chain Factory. Then in 1901, when American Bicycle found itself in deep financial difficulty, it sold Diamond Chain to Federal Manufacturing Co., also of Cleveland, but Wainwright remained general manager.

Among the agents for Diamond chains were Wilbur and Orville Wright, owners of a bicycle shop in Dayton, Ohio. The Wright connection turned out to be the right connection. In 1903, after getting short shrift from most of the automobile companies they approached to build an engine for their proposed heavier-than-air engine-driven flying machine, the undaunted Wright brothers did it themselves using seven Diamond chains that Wainwright designed to drive the propeller.

In 1904, Federal Manufacturing ran into financial difficulties. When the troubled company decided to divest itself of Diamond Chain, Wainwright set about the task of raising the $400,000 necessary to buy it. Through an issue of $300,000 in common and $100,000 in preferred stock, he got the necessary financing, and on April Fools' Day of 1905, the new Diamond Chain & Manufacturing Co. went into business with Wainwright as a majority stockholder.

Every other year for the next several years the company took a giant step forward. By 1907, the increasing orders for automotive drive chain necessitated an addition to the Old Building. In 1909, construction of the Indianapolis Motor Speedway, where Diamond chains were used extensively, increased the company's visibility. In 1911, Diamond Chain added sprockets to its line of chain products.

In 1915, because the only other producers of bicycle chain, England, France and Germany, were embroiled in a war to end all wars, Diamond Chain had to prepare itself to carry the loan of world demand. A stream of orders from overseas began that year, and by 1917, when the United States entered the war, production capacity had been developed to the point where it exceeded demand. Also in 1917, construction started on the "New Building," a four-story, reinforced concrete structure, one of the first in Indianapolis, at the corner of Kentucky Avenue and South Street. This same building, with six major additions, continues to serve as company's headquarters and base of manufacturing operations.

During World War I, Diamond Chain made a major contribution to the war effort. Most of its industrial output went for military use on ships, airplanes, motorcycles and the heavy-duty trucks that were used by road-building battalions. It also helped factory workers stay on the job by keeping their bicycles up and running.

In the '20s, Diamond Chain was in the vanguard of the employee benefits movement. It had an on-site infirmary, a cafeteria and a cooperative where employees could buy "provisions" (groceries, housewares, fuel, paper products, clothing) at a discount. It also offered group life insurance, had a credit union and a structured personnel department.

Depression-era activity at Diamond Chain slowed considerably, as it did throughout U.S. industry. Late in the '30s, however, its involvement in metallurgical research prior to World War II invigorated the company. After Pearl Harbor, the plant operated around the clock, turning out chains and sprockets for military and industrial equipment. Diamond Chain was involved in more than 30 functions on World War II aircraft. One of the company's customers was Boeing Co., which used Diamond chain on the B-29 bombers it unveiled in the final phase of the war.

Following Wainwright's death in 1931, his son, Guy, a Purdue University graduate, ascended to the company presidency. The current president, Jack R. Milby, is the only man to head the company who is neither a native Hoosier nor a Purdue graduate.

According to Milby, the company at present is eyeing expansion into the European market by establishing a warehouse to make the product more readily available overseas. After that, what's ahead for Diamond Chain? Sums up Milby: "It is a fine company. I'm sure it will be around another 100 years. There will always be a demand for chain, at least a quality chain," he says. "And that's all we make."
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Title Annotation:Special Feature; Diamond Chain Co.
Author:Hughes, Ann
Publication:Indiana Business Magazine
Date:Dec 1, 1990
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