The U.S. banking crisis that began with the Knickerbocker Trust failure in 1907 was the Panic of 1907.
Knickerbocker Trust Company, one of New York’s largest trust companies, collapsed after an unsuccessful attempt to corner the stock of United Copper Company. Depositors then rushed to withdraw money from other trust companies, creating a broad liquidity crisis.
The panic was contained largely through the intervention of financier J. P. Morgan, who organized private support for banks and brokerages. The U.S. Treasury also supplied funds. The episode showed that the country lacked a central bank able to act as a lender of last resort.
The Federal Reserve System was created in 1913, partly in response to the weaknesses exposed by the panic. The event should not be confused with the Panic of 1893, another severe U.S. financial crisis that had different immediate triggers.