The 1907 crisis that led J. P. Morgan to organize a private rescue of the U.S. banking system was the Panic of 1907.
The panic began after an unsuccessful attempt to corner shares of United Copper Company caused runs on Knickerbocker Trust Company and other financial institutions. Trust companies operated outside the traditional national-bank structure and held fewer immediately available reserves, making them vulnerable when depositors demanded cash.
J. P. Morgan gathered bankers in New York and used his influence, money, and offices to coordinate emergency loans and decide which institutions could be supported. The intervention helped prevent a wider collapse, although the rescue exposed the weakness of relying on one private financier during a national crisis.
The panic contributed directly to the creation of the Federal Reserve System. Congress established the Federal Reserve in 1913, giving the United States a permanent central banking institution intended to provide liquidity during future financial emergencies.