During the Panic of 1907, which trust company’s collapse intensified the New York banking crisis?

During the Panic of 1907, the collapse of Knickerbocker Trust Company intensified the New York banking crisis.

On October 22, 1907, depositors withdrew their money from Knickerbocker Trust after the institution became associated with a failed attempt to corner the stock of United Copper. The run forced the company to suspend operations, making it one of the most visible failures of the panic.

The panic spread through banks, trust companies, and the stock market. Trust companies held fewer cash reserves than commercial banks, leaving them especially vulnerable to withdrawals. Financier J. P. Morgan organized emergency support for solvent institutions and helped prevent a wider collapse.

A common mix-up is calling Knickerbocker a bank. It was a trust company, a financial institution that performed banking-like functions. The crisis later helped persuade U.S. lawmakers to create the Federal Reserve System in 1913.