The U.S. financial crisis marked by the 1907 stock-market panic was the Panic of 1907.
The crisis began after a failed attempt to corner the shares of United Copper Company. When the scheme collapsed, depositors rushed to withdraw money from banks and trust companies connected to the speculators. The Knickerbocker Trust Company, then New York’s third-largest trust, failed in October 1907.
The panic spread through financial markets, causing sharp declines in stock prices and severe pressure on banks. J. Pierpont Morgan organized private-sector support to keep viable institutions operating. The episode demonstrated the weakness of the United States’ decentralized banking system.
The Panic of 1907 helped inspire the creation of the Federal Reserve System in 1913. It is sometimes confused with the Panic of 1893, another major U.S. financial crisis, but the 1907 episode was the immediate background to America’s central-bank reform.