CLEVELAND, JAN. 11 -- President Reagan blamed Wall Street today for the October stock market collapse, saying that a panic fueled by the trading of about 15 brokerage houses was responsible for the biggest drop in stock prices since the Great Depression.
"I don't, first of all, I don't believe that the dollar or anything outside Wall Street had anything to do with the great debacle in October," the president said in response to a question about the economy and whether he feared a recession.
Reagan told members of the City Club here he had no fears of such a turn in the economy but said he was troubled by persistent media reports predicting a recession because "that could bring on bad times and a recession."
The president, who used his 24-minute address to the 75-year-old civic club as a lecture on the economic progress his administration has helped bring to cities like Cleveland, cited rising employment levels and said the U.S. economy remains the envy of the world.
"So, I don't anticipate a recession unless some of the doom criers scare the people into one. Let's talk it up," Reagan said to applause.
In his speech and in his response to questions, the president repeated his familiar assertion that reduced federal deficits and spending are essential to improving the economy. But he played down the nation's continuing trade deficits, saying that while "some people call this debt," others argue "it's a sign of strength" illustrating the power of the U.S. economy to attract investors from around the world.
"I'm not saying there aren't problems. The one that sticks out like a sore thumb is that United States budget deficit," he said. "It's an embarrassment and a shame, most dangerous, perhaps, because it signals a complete breakdown of the most basic functions of the United States government."
Reagan's comments on what caused the stock market crash were the most detailed he has made since Friday, when he received a report from a presidential commission on what caused the collapse.
The president said his remarks were supported by findings of the commission headed by Nicholas F. Brady, the chairman of an established New York investment firm. Reagan said Brady told him "that what took place was a panic as a result of, well, there were no more than . . . about 15 firms that were involved in the great change that was taking place in the marketplace, but that it was induced within the marketplace, and not from something, some factor outside."
"I wouldn't have expressed it quite that way, but I think he is right," Brady said. In the executive summary of his report, the commission said two events "triggered" the decline: the unexpectedly high U.S. trade deficit which had pushed interest rates higher, and proposed tax bills that were designed to discourage corporate takeovers. "This initial decline ignited mechanical, price-insensitive selling by a number of institutions . . . and a small number of mutual fund groups . . . ," the report said.
In response to another question, the president restated that it was still "too early" to comment on whether he might pardon any of his administration officials who were involved in the Iran-contra affair. But he added that he had not seen any evidence of "what I considered law-breaking that was taking place on the part of anyone in the administration."
The president's appearance in Cleveland, an industrial city where city officials speak optimistically of a population that had finally "stabilized" at 530,000 after long decline, served dual purposes.
After he spoke to about 1,500 people gathered in a hotel ballroom, he attended a private $1,000-per-person reception for the city's Republican mayor, George V. Voinovich, who is regarded as an underdog in his challenge to Sen. Howard M. Metzenbaum (D-0hio) in the fall Senate elections.
Reagan mistakenly endorsed Voinovich as "your former mayor." The 51-year-old Republican has run the city government since 1979.