Which U.S. trust company failed during the Panic of 1907?

The Knickerbocker Trust Company failed during the Panic of 1907.

Knickerbocker Trust was one of New York’s largest trust companies. A failed stock-market speculation involving United Copper helped undermine confidence in its leadership and finances. On October 22, 1907, the company suspended operations after depositors rushed to withdraw their money.

Its collapse intensified the panic because trust companies performed important financial functions but were not subject to exactly the same reserve arrangements as commercial banks. Depositors then demanded cash from other institutions, spreading the run through the financial system.

J. P. Morgan and other financiers organized emergency measures to prevent further failures. The episode helped convince U.S. policymakers that the country needed a lender of last resort. Congress later created the Federal Reserve System in 1913, several years after Knickerbocker’s suspension.