The 1907 U.S. financial crisis that saw the New York Stock Exchange fall nearly 50% from its peak was the Panic of 1907.
The panic unfolded after a failed attempt to corner the stock of United Copper Company, followed by runs on banks and trust companies connected to the speculators. Trust companies were especially vulnerable because they held fewer cash reserves and faced less regulation than commercial banks.
The crisis spread when depositors demanded cash and confidence in financial institutions weakened. The New York Stock Exchange suffered a dramatic decline, and the collapse of the Knickerbocker Trust Company became a major symbol of the emergency. J. P. Morgan organized private support to stabilize key institutions and the broader banking system.
The panic strengthened arguments for a central bank. In 1913, the United States created the Federal Reserve System, which was intended to provide a more reliable lender of last resort.