New York City’s Knickerbocker Trust Company failure helped trigger the Panic of 1907.
Knickerbocker Trust Company, then one of New York’s largest trust companies, suspended operations on October 22, 1907. The failure followed a failed attempt to corner shares of United Copper Company and caused depositors to withdraw funds from other trust companies.
The panic spread through New York’s banking system and the wider economy. J. Pierpont Morgan organized private support, persuaded banks to provide liquidity, and helped coordinate rescues. His intervention was crucial because the United States did not yet have a central bank capable of acting as a lender of last resort.
The crisis eventually encouraged the creation of the Federal Reserve System in 1913. The Panic of 1907 is therefore important not only as a market and banking collapse but also as a turning point in U.S. monetary institutions. The Knickerbocker failure was a major trigger, but speculative finance and fragile trust-company structures made the system vulnerable.