The U.S. financial panic that began with a run on Knickerbocker Trust in October 1907 was the Panic of 1907.
The crisis started after an unsuccessful attempt to corner shares of United Copper Company. When the scheme failed, depositors rushed to withdraw money from Knickerbocker Trust, then one of New York’s largest trust companies. Its collapse intensified distrust of similar institutions and spread through financial markets.
J. Pierpont Morgan organized private-sector support, persuading banks and financiers to provide emergency funds and stabilize the banking system. The New York Stock Exchange also faced severe liquidity pressure, and interest rates rose sharply as institutions sought cash.
The panic helped convince U.S. policymakers that the country needed a central bank. The Federal Reserve System was created in 1913. The Panic of 1907 is sometimes confused with the Panic of 1893, another major U.S. banking crisis, but the two occurred in different decades and had different immediate triggers.