Which New York trust company’s failure helped trigger the Panic of 1907, a major U.S. stock-market crash?

The Knickerbocker Trust Company’s failure helped trigger the Panic of 1907, a major U.S. stock-market crash.

The company was New York’s third-largest trust when a failed attempt to corner United Copper shares caused a run on its deposits in October 1907. Its president, Charles T. Barney, resigned, and the trust suspended operations on October 22.

The failure intensified public fear about other banks and trusts. J. P. Morgan organized emergency lending and coordinated support for solvent institutions, helping prevent a broader collapse. The panic also exposed weaknesses in the U.S. banking system before the Federal Reserve existed.

A common mix-up is calling Knickerbocker Trust a conventional commercial bank. It was a trust company, a financial institution that accepted deposits and invested funds but operated under different rules. The crisis eventually contributed to the creation of the Federal Reserve in 1913.