The 1907 financial panic that led J. P. Morgan to organize a private rescue of major U.S. banks was the Panic of 1907.
The crisis began after an unsuccessful attempt to corner shares of the United Copper Company. Depositors then withdrew funds from related banks and trust companies, spreading fear through New York’s financial system. The Knickerbocker Trust Company, one of the city’s largest trust companies, suspended operations on 22 October 1907.
J. P. Morgan convened bankers in his library and used his influence, money, and negotiations to stabilize institutions and markets. The U.S. Treasury, led by Secretary George B. Cortelyou, also supplied funds. The rescue showed how dependent the financial system was on private coordination because the United States had no modern central bank at the time.
The panic helped create political support for structural reform. The Federal Reserve System was established in 1913, partly in response to the weaknesses exposed by the crisis. The event is sometimes called the Knickerbocker Panic, but Panic of 1907 is the standard name.