The 1907 U.S. financial panic exposed the need for a central bank and helped inspire the Federal Reserve.
The crisis began in October 1907 after an attempted cornering of United Copper shares failed. The resulting run spread to banks and trust companies, especially in New York. Depositors withdrew cash, while financial institutions struggled to obtain emergency liquidity.
Financier J. P. Morgan organized private rescue efforts, including the support of solvent banks and the stabilization of the Knickerbocker Trust Company’s collapse. The panic damaged confidence and contributed to a sharp economic contraction.
The Aldrich–Vreeland Act of 1908 created a National Monetary Commission to study banking reform. Its work helped lead to the Federal Reserve Act of 1913. The panic is sometimes confused with the Panic of 1893, another severe U.S. banking crisis, but the 1907 episode directly preceded the creation of the Federal Reserve System.