During the Panic of 1907, which New York trust company’s collapse intensified the stock-market crash?

During the Panic of 1907, the collapse of the Knickerbocker Trust Company intensified the stock-market crash.

The Knickerbocker Trust Company was one of New York’s largest financial institutions when it failed in October 1907. A failed attempt to corner the stock of United Copper Company damaged confidence in the institution and prompted depositors to withdraw their money.

The run spread through other banks and trust companies, producing a severe liquidity crisis. The New York Stock Exchange fell sharply, while banks restricted lending and businesses struggled to obtain cash. The crisis helped persuade American leaders that the country needed a central banking system.

The panic is often associated with financier J. P. Morgan, who organized private rescue efforts. The Federal Reserve was not created until 1913, so the Knickerbocker failure exposed weaknesses in the U.S. financial system before that reform.