The 1907 U.S. financial panic was the Panic of 1907, a crisis stabilized partly through J. P. Morgan’s emergency efforts.
The panic began after a failed attempt to corner the stock of United Copper Company. The failure damaged confidence in several trust companies, a rapidly expanding part of the American financial system that had fewer formal reserve requirements than commercial banks. Depositors and investors rushed to withdraw funds, producing a liquidity crisis.
J. P. Morgan organized private-sector support, examined institutions, arranged loans, and persuaded bankers to keep credit flowing. The crisis exposed weaknesses in the U.S. banking system and helped build support for a central bank. Congress later created the National Monetary Commission, whose work contributed to the Federal Reserve Act of 1913.
The Panic of 1907 is sometimes called the Knickerbocker Panic, after the Knickerbocker Trust Company, but that label describes the crisis’s most famous institutional failure rather than its standard historical name.