During the Panic of 1907, which New York trust company’s suspension of payments helped trigger the crisis?

During the Panic of 1907, Knickerbocker Trust Company’s suspension of payments helped trigger the crisis.

The company was the third-largest trust company in New York City. In October 1907, financier F. Augustus Heinze became associated with an unsuccessful attempt to corner the stock of United Copper Company. Although Knickerbocker’s president, Charles T. Barney, was not directly involved in the scheme, the connection damaged public confidence.

On October 22, 1907, depositors withdrew large sums from Knickerbocker Trust. The institution could not meet the demand and suspended operations, causing withdrawals and runs at other banks and trust companies. The panic spread through financial markets and produced a severe stock-market decline.

A common mix-up is identifying the Knickerbocker episode as the entire cause of the Panic of 1907. The failed speculation was an immediate trigger, but the crisis also reflected weak regulation, fragile trust companies, and limited emergency lending facilities. J. P. Morgan’s later coordination of private support helped stabilize the banking system.