If you look closely at the two photos @cyclingday
posted above, you will see a notation on the top photo showing the location that they placed a special rim measuring tape during production. In the second photo it shows this location marked "1B", it's just on the shoulder of the inside of the rim. This is how they determined the actual tire diameter, but they measured it in rim circumference.
The flat metal was rolled (or formed) into a tubular rim, but it was one long straight rim. At the end of the tube rolling machine, the rim material went into another machine that rolled the straight section into a round rim. During the machine set up, and ongoing quality control during the day, they "hand measured" the rim circumference and set the machine to cut off the rim at precisely at the correct size.
It was this measuring tape that determined that they manufactured the correct rim size and if a tire would fit properly, or fall off a rim. The rim diameter, or Schwinn used the circumference method was the most important issue, the "hook side" or "straight side" is not a critical issue for the tire/rim fit. Anybody that has ever tried to put a 1.75 tire, on a 1 3/4 rim will confirm it's the difference in circumference. The two numbers might be mathematically interchangeable, but the tires will not interchange.
More Schwinn Trivia