Which financial institution's failure in 1907 helped persuade the United States to create the Federal Reserve System?

The failure of the Knickerbocker Trust Company in 1907 helped persuade the United States to create the Federal Reserve System.

Knickerbocker Trust, then one of New York’s largest trust companies, collapsed after a failed speculation connected with financier F. Augustus Heinze. Depositors rushed to withdraw funds, producing a banking panic that spread through financial markets. The crisis exposed how little organized central support the United States had during emergencies.

J. P. Morgan organized private-sector efforts to stabilize banks and markets. His intervention helped contain the panic, but the episode demonstrated the risks of relying on one private financier. The National Monetary Commission subsequently studied banking systems abroad.

Congress passed the Federal Reserve Act in 1913, creating the Federal Reserve System. The 1907 panic therefore influenced institutional reform, but the Federal Reserve did not exist during the crash itself. J. P. Morgan was a crisis manager, not the failed institution named in the question.