 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 . 
