The stock exchange crash in 1907 that helped prompt creation of the Federal Reserve occurred in the United States.
The Panic of 1907 began after a failed attempt to corner the stock of United Copper Company. When the scheme collapsed, depositors and investors lost confidence in associated banks and trust companies. A run on the Knickerbocker Trust Company helped spread the panic through New York’s financial system.
The United States did not yet have a central bank capable of acting as a lender of last resort. Financier J. P. Morgan coordinated emergency support with other bankers, helping prevent an even broader collapse.
The crisis encouraged reforms. The Aldrich–Vreeland Act created an emergency currency framework, and the Federal Reserve Act of 1913 established the Federal Reserve System. The crash was therefore an important cause of reform, not the sole event that created the central bank.