The 1907 U.S. financial crisis that prompted J.P. Morgan’s rescue efforts was the Panic of 1907.
The panic began after a failed attempt to corner the stock of United Copper Company. Depositors then rushed to withdraw funds from associated trust companies, and confidence weakened across New York’s financial system. Trust companies were less heavily regulated than national banks and had become important providers of credit.
J. P. Morgan gathered bankers, examined institutions, and arranged emergency financing to prevent further failures. The episode showed how dependent the United States was on private coordination because it had no central bank capable of supplying emergency liquidity on the modern Federal Reserve model.
The crisis helped build political support for monetary reform. The Federal Reserve System was created in 1913, five years after the panic. The Panic of 1907 was therefore a banking and credit crisis as well as a stock-market shock.