Which U.S. bank failure intensified the Panic of 1907 and helped inspire creation of the Federal Reserve?

The Knickerbocker Trust Company failure intensified the Panic of 1907 and helped inspire creation of the Federal Reserve.

Knickerbocker Trust was one of New York’s largest trust companies. In October 1907, a failed attempt to corner the stock of United Copper Company damaged confidence in the institution and in its president, Charles T. Barney. Depositors began withdrawing funds, producing a run.

The company suspended operations on October 22, 1907. The panic then spread through banks and trust companies, while financier J. P. Morgan organized emergency support to stabilize the financial system. Because the United States lacked a central bank capable of acting as a lender of last resort, private coordination played an unusually large role.

The crisis strengthened arguments for monetary reform. The Federal Reserve System was created in 1913, although the Knickerbocker failure was one influence among several rather than the sole cause.