The 1907 U.S. panic in which J. P. Morgan helped stabilize the financial system was the Panic of 1907. The crisis began after a failed attempt to corner the stock of United Copper Company triggered runs on related banks and trust companies.
Depositors withdrew funds from institutions they feared could not meet their obligations. Trust companies, which were less tightly regulated than commercial banks, became central to the turmoil. The New York Stock Exchange also suffered a sharp decline, and short-term credit became scarce.
J. P. Morgan convened bankers, examined institutions, and arranged private financing to prevent additional failures. His intervention highlighted how much responsibility a private financier could assume when the United States lacked a modern central bank.
The panic helped build political support for the Federal Reserve System. Congress created the Federal Reserve in 1913, giving the United States a permanent central banking structure designed partly to provide liquidity during financial emergencies.