The financial panic in 1907 that caused a severe U.S. stock-market decline and helped inspire the Federal Reserve was the Panic of 1907.
The crisis began after a failed attempt to corner the stock of United Copper Company. When the scheme collapsed, depositors rushed to withdraw money from banks and trust companies connected to the speculators. The panic spread through New York’s financial system and pushed markets sharply lower.
J. P. Morgan organized private emergency support, including loans and a rescue of the troubled Knickerbocker Trust Company. The episode exposed the United States’ lack of a central bank able to provide emergency liquidity. Congress later created the Federal Reserve System in 1913.
The Panic of 1907 is sometimes confused with the longer depressions associated with 1893 and 1873. Its distinctive legacy was the political momentum it gave to central-bank reform.