The stock-market crash following the 1907 failure of the Knickerbocker Trust Company was the Panic of 1907.
Knickerbocker Trust, then one of New York’s largest trust companies, collapsed in October 1907 after a failed attempt to corner the stock of United Copper. Depositors withdrew funds from other trusts, and fear spread through the banking system. The New York Stock Exchange also experienced a sharp decline.
Financier J. P. Morgan organized private support to stabilize banks and trusts when no US central bank existed. His intervention helped prevent an even wider collapse, but the episode convinced many policymakers that the country needed a permanent lender of last resort.
The Federal Reserve System was created in 1913, several years after the panic. The event is sometimes confused with earlier US panics, especially 1893, but the Knickerbocker Trust failure is a defining episode of 1907.