Which 1907 U.S. financial crisis led to the creation of the Federal Reserve System?

The 1907 U.S. financial crisis was called the Panic of 1907.

The panic began after an unsuccessful attempt to corner the stock of United Copper Company. When the scheme failed, depositors withdrew money from banks connected to the speculators. Trust companies, which were less regulated than commercial banks, came under especially severe pressure.

J. P. Morgan organized private assistance for threatened institutions and helped coordinate emergency lending. His intervention calmed the immediate crisis, but it also revealed how dependent the U.S. financial system was on one powerful private banker.

Congress later created the National Monetary Commission to study banking reform. The Federal Reserve Act of 1913 established the Federal Reserve System, although the panic itself did not create the central bank immediately. It is therefore best understood as a major cause of the reform movement.