Which trust company’s failure helped trigger the Panic of 1907 in New York?

Knickerbocker Trust Company’s failure helped trigger the Panic of 1907 in New York.

Knickerbocker Trust was one of New York’s largest trust companies. Its president, Charles T. Barney, was linked to speculator F. Augustus Heinze, whose failed effort to manipulate United Copper’s share price undermined public confidence.

After banks refused further support, Knickerbocker customers rushed to withdraw their money. The company suspended operations on October 22, 1907, making it a highly visible symbol of the panic and intensifying runs on other financial institutions.

The episode showed that trust companies could perform bank-like functions without holding the same level of immediately available reserves. J. P. Morgan then organized emergency support for other institutions. The panic ultimately strengthened the case for a permanent central banking system, leading to the Federal Reserve Act of 1913.