Which financial institution’s failure was central to the 1907 Panic that shook U.S. stock markets?

The Knickerbocker Trust Company’s failure was central to the 1907 Panic that shook U.S. stock markets.

Knickerbocker Trust, then one of New York’s largest trust companies, collapsed after a failed attempt to corner the stock of United Copper Company became public. Depositors rushed to withdraw funds, and the panic spread to other trust companies and banks. Because the United States had no central bank at the time, the financial system lacked a standing institution designed to provide emergency liquidity.

J. Pierpont Morgan organized private-sector support by gathering bankers, arranging loans, and helping determine which institutions could be rescued. His intervention helped prevent an even wider collapse, although the panic still caused sharp market declines and a recession.

The crisis contributed directly to political support for monetary reform. The Federal Reserve Act of 1913 created the Federal Reserve System, giving the United States a central bank with responsibilities that included stabilizing the banking system. Knickerbocker Trust itself did not recover its former position.