Which trust company’s failure became the decisive turning point in the Panic of 1907?

The Knickerbocker Trust Company’s failure became the decisive turning point in the Panic of 1907.

The New York trust company suspended operations on October 22, 1907, after a failed attempt to corner shares of United Copper. Depositors rushed to withdraw funds, and the run spread to other financial institutions. Because trusts held fewer cash reserves than commercial banks, they were especially vulnerable to sudden withdrawals.

The panic worsened when the Trust Company of America faced heavy withdrawals. Financier J. P. Morgan organized emergency lending and persuaded banks to provide liquidity. The episode helped convince U.S. leaders that the country needed a central banking system, leading to the creation of the Federal Reserve in 1913.

Knickerbocker Trust was not itself a stock exchange, and its collapse was not the original trigger. The failed United Copper speculation came first; the trust’s suspension transformed that failure into a wider financial panic.