The financial crisis that began with the failure of the Knickerbocker Trust Company in 1907 was the Panic of 1907.
The crisis followed a failed attempt to corner the stock of United Copper Company. When the speculation collapsed, depositors rushed to withdraw funds from trust companies, especially Knickerbocker Trust in New York. The resulting loss of confidence spread through financial markets and banks.
J. Pierpont Morgan helped stabilize the system by organizing emergency lending and persuading institutions to provide liquidity. The episode exposed the United States’ lack of a formal central bank and became an important argument for creating one.
Congress later established the National Monetary Commission, whose work contributed to the Federal Reserve Act of 1913. The Panic of 1907 is also called the Bankers’ Panic.