J. P. Morgan was central to preventing a wider collapse during the Panic of 1907.
The panic began after a failed attempt to corner the stock of United Copper Company triggered runs on Knickerbocker Trust and other financial institutions. New York banks faced withdrawals, while the stock market suffered sharp losses and credit became difficult to obtain.
Morgan used his influence, private funds, and access to financial information to coordinate emergency support. He gathered bankers in his library, helped determine which institutions could survive, and persuaded banks to provide liquidity. His actions helped stabilize the system before a complete nationwide banking collapse.
The episode also revealed the weakness of the United States’ fragmented banking structure and its lack of a central bank. Public concern after the panic contributed to the creation of the National Monetary Commission and eventually the Federal Reserve System in 1913.