The 1907 U.S. financial crisis that caused a severe stock-market panic was the Panic of 1907.
The panic began after a failed attempt to corner the stock of United Copper Company. When the scheme collapsed, depositors and investors questioned the stability of several trust companies connected to the speculators. Runs on financial institutions spread, and the New York Stock Exchange experienced a sharp fall in prices and a shortage of available credit.
J. Pierpont Morgan personally organized emergency support, persuading banks and financiers to provide funds and helping prevent the collapse of the banking system. The crisis revealed how heavily the United States depended on private coordination because it had no modern central bank.
The Panic of 1907 helped create political support for the Federal Reserve System, which Congress established in 1913. It is sometimes confused with the Panic of 1893, another major U.S. financial crisis, but the 1907 episode directly preceded the creation of the Federal Reserve and is commonly described as its key institutional catalyst.