The 1907 U.S. financial panic began after failed speculation in the United Copper Company.
The scheme involved an attempt to corner United Copper shares. When the plan collapsed, depositors rushed to withdraw money from banks connected to the speculators. The crisis spread through trust companies, which were less regulated than commercial banks and held large amounts of securities.
J. P. Morgan organized private support for threatened institutions and helped stabilize the banking system. The New York Stock Exchange also suffered a sharp decline, while interest rates rose dramatically because available credit became scarce.
The panic helped convince American policymakers that the country needed a central banking institution. The Federal Reserve System was created in 1913. It is sometimes confused with the 1893 panic, but the 1907 episode was the immediate financial argument for reform.