Which 1907 U.S. financial panic led to the founding of the Federal Reserve System?

The Panic of 1907 was the U.S. financial crisis that helped lead to the founding of the Federal Reserve System.

The panic began after a failed attempt to corner the stock of United Copper Company. When the scheme collapsed, depositors withdrew money from associated trust companies, especially the Knickerbocker Trust Company in New York. The withdrawals spread, producing a severe liquidity crisis and a sharp fall in stock prices.

Financier J. P. Morgan organized private support for banks and trust companies and helped coordinate emergency lending. His intervention limited the damage, but the episode also demonstrated that the United States lacked a permanent institution able to act as lender of last resort. The Aldrich-Vreeland Act followed in 1908, and the Federal Reserve Act created the Federal Reserve in 1913.

The panic is sometimes called the Knickerbocker Crisis because of the prominent failure of that trust company. It was not the same event as the later Wall Street Crash of 1929.