The Panic of 1907 began after the failure of Knickerbocker Trust helped trigger a U.S. financial panic.
Knickerbocker Trust, then one of New York’s largest trust companies, failed on October 22, 1907. The failure followed a failed attempt to corner the stock of United Copper Company and helped provoke runs on other banks and trust companies.
J. P. Morgan organized private-sector support to stabilize the banking system, supplying funds and coordinating rescues. The crisis exposed the absence of a U.S. central bank capable of acting as a lender of last resort. The Federal Reserve System was created in 1913, partly in response to lessons from the panic.
The episode is sometimes described as a stock-market crash, but it was also a banking and credit crisis. The New York Stock Exchange suffered major losses, while withdrawals, trust-company failures, and a shortage of liquidity made the panic especially dangerous.