The Panic of 1907 led J. P. Morgan to organize a private rescue of the U.S. banking system.
The panic began after a failed attempt to corner the stock of United Copper Company. Runs spread to trust companies, especially the Knickerbocker Trust Company in New York. Because the United States lacked a central bank able to supply emergency liquidity, confidence deteriorated rapidly.
J. P. Morgan gathered bankers, examined institutions’ finances, arranged loans, and used his influence to prevent further failures. The Treasury also supplied funds. Morgan’s intervention helped stabilize the system, but relying on one private financier revealed a major structural weakness in American banking.
The panic contributed to creation of the National Monetary Commission and eventually the Federal Reserve System in 1913. It is often confused with the stock-market panics of 1873 and 1893, but the 1907 episode is especially associated with the Knickerbocker Trust failure and Morgan’s rescue effort.