<P> The Panic of 1907--also known as the 1907 Bankers' Panic or Knickerbocker Crisis--was a United States financial crisis that took place over a three - week period starting in mid-October, when the New York Stock Exchange fell almost 50% from its peak the previous year . Panic occurred, as this was during a time of economic recession, and there were numerous runs on banks and trust companies . The 1907 panic eventually spread throughout the nation when many state and local banks and businesses entered bankruptcy . Primary causes of the run included a retraction of market liquidity by a number of New York City banks and a loss of confidence among depositors, exacerbated by unregulated side bets at bucket shops . The panic was triggered by the failed attempt in October 1907 to corner the market on stock of the United Copper Company . When this bid failed, banks that had lent money to the cornering scheme suffered runs that later spread to affiliated banks and trusts, leading a week later to the downfall of the Knickerbocker Trust Company--New York City's third - largest trust . The collapse of the Knickerbocker spread fear throughout the city's trusts as regional banks withdrew reserves from New York City banks . Panic extended across the nation as vast numbers of people withdrew deposits from their regional banks . </P> <P> The panic might have deepened if not for the intervention of financier J.P. Morgan, who pledged large sums of his own money, and convinced other New York bankers to do the same, to shore up the banking system . This highlighted the impotence of the nation's Independent Treasury system, which managed the nation's money supply, yet was unable to inject liquidity back into the market . By November, the financial contagion had largely ended, only to be replaced by a further crisis . This was due to the heavy borrowing of a large brokerage firm that used the stock of Tennessee Coal, Iron and Railroad Company (TC&I) as collateral . Collapse of TC&I's stock price was averted by an emergency takeover by Morgan's U.S. Steel Corporation--a move approved by anti-monopolist president Theodore Roosevelt . The following year, Senator Nelson W. Aldrich, father - in - law of John D. Rockefeller, Jr., established and chaired a commission to investigate the crisis and propose future solutions, leading to the creation of the Federal Reserve System . </P> <P> When United States President Andrew Jackson allowed the charter of the Second Bank of the United States to expire in 1836, the U.S. was without any sort of central bank, and the money supply in New York City fluctuated with the country's annual agricultural cycle . Each autumn money flowed out of the city as harvests were purchased and--in an effort to attract money back--interest rates were raised . Foreign investors then sent their money to New York to take advantage of the higher rates . From the January 1906 Dow Jones Industrial Average high of 103, the market began a modest correction that would continue throughout the year . The April 1906 earthquake that devastated San Francisco contributed to the market instability, prompting an even greater flood of money from New York to San Francisco to aid reconstruction . A further stress on the money supply occurred in late 1906, when the Bank of England raised its interest rates, partly in response to UK insurance companies paying out so much to US policyholders, and more funds remained in London than expected . From their peak in January, stock prices declined 18% by July 1906 . By late September, stocks had recovered about half of their losses . </P>

​the individual credited with ending the panic of 1907 in the united states was