Final answer:
The Populist Party failed to make expected gains in the 1892 election due to a combination of the nation's urbanization, the beginning of economic recovery, the discovery of gold deposits in the Klondike, and the decision to support the Democratic candidate William Jennings Bryan in the 1896 election, which compromised their distinct identity.
Step-by-step explanation:
The Populist Party expected significant gains in the 1892 election due to their success in addressing the needs of farmers and workers who were suffering from the economic depression of the 1890s. However, their support for William Jennings Bryan, the Democratic candidate in the 1896 presidential election, did not yield the expected results as Bryan lost to William McKinley, thereby the Populists failed to make significant gains.
Several factors contributed to this outcome. The urbanization of America meant that the Populists' rural base was becoming less influential. Their strong stance against the gold standard, as emphasized in Bryan's 'Cross of Gold' speech, failed to resonate with the urban electorate. Additionally, the emerging economic recovery after the Panic of 1893, alongside the discovery of gold in the Klondike, bolstered confidence in the current system and led to diminished support for the radical change the Populists represented.
Their decision to reject fusion with local Democrats in certain states resulted in the loss of once secured seats. Moreover, by aligning with the Democrats, the Populists struggled to maintain their distinct identity, leading to criticism and a reduced ability to differentiate themselves from the other major parties. When they did finally support a Democrat, it was at a time when the economy was beginning to improve, and they lost momentum as a separate political entity.