Which trust company’s failure helped trigger the Panic of 1907 and a major U.S. stock-market collapse?

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

Knickerbocker Trust, then one of New York’s largest trust companies, became associated with an unsuccessful attempt to corner the stock of United Copper Company. When the scheme failed in October 1907, depositors began withdrawing funds. A run on Knickerbocker forced the institution to suspend operations on October 22.

The panic spread through financial institutions and markets. Banks tightened lending, call-money rates rose dramatically, and stock prices fell. The crisis became especially dangerous because the United States had no central bank capable of quickly supplying emergency liquidity.

Financier J. P. Morgan organized private support for banks and trust companies, helping stabilize the system. The panic later encouraged the creation of the Federal Reserve System in 1913. Knickerbocker Trust did not cause every underlying weakness, but its collapse became the most visible early spark of the crisis.