The Panic of 1907 began in New York City after a failed attempt to corner United Copper stock.
The Heinze brothers and their associates believed they could force short sellers to buy shares at inflated prices. When the plan failed, United Copper’s price plunged, exposing links among banks, trust companies, and brokerage firms in New York.
Depositors then rushed to withdraw money from institutions associated with the speculators. The crisis spread through the financial system, and the New York Stock Exchange suffered a sharp decline. J. P. Morgan organized emergency support with other financiers and helped prevent a broader banking collapse.
The panic demonstrated the weakness of the U.S. banking system before the Federal Reserve. Congress later created the National Monetary Commission, which helped lead to the Federal Reserve Act of 1913.