The Panic of 1907 was the U.S. financial crisis that exposed the need for a central bank before the Federal Reserve was created.
The panic began after a failed attempt to corner the stock of United Copper Company triggered runs on trust companies and banks. The crisis spread through financial markets, and the Knickerbocker Trust Company collapsed in New York in October 1907.
With no central bank available to provide emergency liquidity, financier J. P. Morgan organized private support for threatened institutions. His intervention helped stabilize the system, but it also demonstrated how heavily the country depended on one private banker during a crisis.
The aftermath led to the Aldrich–Vreeland Act of 1908 and the National Monetary Commission. Their investigations contributed to the Federal Reserve Act of 1913, which created the Federal Reserve System. The panic is sometimes confused with the Panic of 1893, another major U.S. banking crisis.