Talking us into a recession

Yoni Appelbaum, writing in the Atlantic, argues that William Jennings Bryan single-handedly created a double-dip recession for the United States when he delivered his Cross of Gold speech in 1896:

Bryan's speech is well remembered. Its consequences are not. Wall Street panicked. For ten days after Bryan's nomination, capital fled across the Atlantic, halted only by the formation of an extraordinary consortium. Even in the months leading up to the convention, the likely ascendancy of silverite forces had spooked businessmen and investors. After Bryan's improbable triumph, the bottom fell out of the economy. The uncertain climate of the spring of 1896 gave way to a prolonged slump. Interest rates rose, investments fell, stock and bond issues dried up, building permits slumped, and new orders for capital goods failed to materialize. Industrial and commercial activity declined across the board.

I can't claim to be any sort of an expert on the Gilded Age economy. I'm sure Appelbaum pursues this line of research in greater detail elsewhere, and I really don't have data to counter him here. But given how little power presidential speeches actually have, I'm skeptical of his argument. Were investors really so skittish and naive as to believe that the claims of a presidential nominee were soon to become law? Even if Bryan were to somehow win (McKinley beat him 51-47), would he be able to get this agenda through Congress? (Republicans held a 246-104 majority in the House at the time Bryan delivered his speech.)

I suppose this is possible. I mean, if Rick Perry were nominated next year and gave a speech at his convention promising to move the U.S. to a monetary system based solely on tungsten, yeah, some folks might panic a bit. But my guess would be that the relationship between Bryan's 1896 address and American economic problems was one of correlation rather than causation.

Update: Matt Glassman notes that Bryan's nomination itself (more so than the speech), was something of a surprise, as few observers expected the silver advocates to secure two-thirds of the convention vote. So perhaps Wall Street did panic when they saw one of America's two major parties being taken over by a faction they perceived as manifestly irresponsible. Still, I'd love to see some hard evidence. I guess I need to read Appelbaum's book.