The Panic of 1907 occurred in 1907 and helped inspire the creation of the Federal Reserve System.
The crisis began after a failed attempt to corner the stock of United Copper Company. When the plan collapsed, depositors withdrew funds from banks and trust companies connected to the speculators. The panic spread because the United States had no central bank able to provide emergency liquidity.
Financier J. P. Morgan organized private support for threatened institutions and persuaded banks to cooperate. His intervention helped prevent a wider collapse, but the episode convinced many policymakers that the financial system needed a permanent lender of last resort.
The Federal Reserve Act was passed in 1913, creating the Federal Reserve System. The Fed was therefore not established during the panic itself. A frequent mistake is to identify 1907 as the year the Federal Reserve began; the system opened in 1914 after the 1913 legislation.