Which U.S. trust company’s failure helped spark the Panic of 1907?

The failure of the Knickerbocker Trust Company helped spark the Panic of 1907.

Knickerbocker Trust, then one of New York’s largest trust companies, became associated with a failed attempt to corner the stock of United Copper Company. When the speculation collapsed in October 1907, depositors rushed to withdraw funds. The company suspended operations on October 22, intensifying fear throughout the banking system.

The panic spread as depositors and investors questioned other banks and trusts. J. P. Morgan organized private-sector support, while clearinghouses issued emergency certificates and coordinated rescues. The episode demonstrated how vulnerable the United States was without a central bank.

The crisis helped build political support for monetary reform. The Federal Reserve System was created in 1913, several years after the panic, to provide a more formal lender of last resort and improve financial stability.