J. P. Morgan helped calm the Panic of 1907 by organizing emergency support for banks.
The Panic of 1907 began after a failed attempt to corner the stock of United Copper Company. When the scheme collapsed, depositors withdrew money from connected trust companies and fear spread through the financial system. Several institutions faced runs, while the New York Stock Exchange also suffered from tight credit.
J. P. Morgan, already one of the most powerful financiers in the United States, used his library and home as locations for negotiations. He examined institutions’ finances, arranged loans and encouraged banks and trust companies to pool resources. His intervention helped prevent a wider collapse.
The crisis exposed weaknesses in the U.S. banking system, which lacked a permanent central bank capable of acting as lender of last resort. The Federal Reserve System was created in 1913. Morgan did not single-handedly solve every problem, but his coordinated emergency action is the defining fact associated with the panic.