The 1907 financial crisis that helped lead to creation of the United States Federal Reserve was the Panic of 1907. It began after a failed attempt to corner the stock of United Copper Company and spread through banks and trust companies.
The panic became especially severe when depositors withdrew funds from institutions viewed as vulnerable. Trust companies were less regulated than national banks and had become important parts of the financial system. The New York Stock Exchange also suffered a sharp decline as credit tightened.
Financier J. P. Morgan organized private support for threatened institutions and helped restore confidence. The crisis convinced many policymakers that the United States needed a more reliable lender of last resort. The Federal Reserve Act was passed in 1913, creating the Federal Reserve System. The panic therefore preceded the central bank by six years rather than occurring after it.