Which bank failure is widely seen as the trigger of the Panic of 1907 in the United States?

The Knickerbocker Trust Company’s failure is widely seen as the trigger of the Panic of 1907 in the United States.

Knickerbocker Trust, then one of New York’s largest trust companies, collapsed after a failed attempt to corner the stock of United Copper. The failure intensified public withdrawals and caused depositors to question other financial institutions. Trust companies were especially vulnerable because they operated outside some traditional banking arrangements while holding substantial assets.

The panic spread through financial markets and produced a severe liquidity shortage. J. P. Morgan helped organize private-sector support for banks and brokerages, while the U.S. Treasury also supplied funds. Morgan’s intervention became one reason Americans increasingly supported the creation of a central bank.

The Panic of 1907 is sometimes confused with a simple stock-market decline. It was a broader banking crisis involving runs, credit contraction and the collapse of financial confidence. The Federal Reserve System was created in 1913, several years after the panic.