The 1907 financial panic that prompted J.P. Morgan to organize a private rescue of the U.S. banking system was the Panic of 1907.
The crisis began after a failed attempt to corner the shares of United Copper Company. Depositors then withdrew money from banks and trust companies connected to the speculators. The runs spread, especially through New York’s trust-company system, and threatened to freeze credit across the country.
J. Pierpont Morgan gathered bankers in his library and used his influence and money to stabilize endangered institutions. He also helped arrange financing for the city of New York when municipal borrowing came under pressure. The emergency response demonstrated how heavily the United States depended on private financiers during a nationwide panic.
The crisis strengthened support for a central banking system. Congress created the National Monetary Commission, whose work helped lead to the Federal Reserve Act of 1913 and the Federal Reserve System in 1914. The Fed was therefore established several years after, not during, the panic.