J. P. Morgan became the central private figure in stabilizing markets during the Panic of 1907.
The Panic of 1907 began after a failed attempt to corner the stock of United Copper Company. The failure spread distrust through banks and trust companies, producing withdrawals and a severe liquidity shortage. The United States had no modern central bank to act as an emergency lender.
J. P. Morgan used his financial influence to organize emergency loans and persuade banks to keep operating. In November, he also helped arrange support for the troubled Knickerbocker Trust Company and other institutions. His role demonstrated how dependent the American financial system was on a single powerful private banker.
The crisis helped inspire the creation of the Federal Reserve System in 1913. Morgan did not single-handedly solve every problem, and the Treasury also supplied funds, but he was the best-known coordinator of the rescue effort.