J. P. Morgan became central to rescuing the U.S. banking system during the Panic of 1907.
The panic began after an unsuccessful attempt to corner the stock of United Copper Company. The failure spread distrust through trust companies and banks, causing withdrawals and a liquidity crisis. With no U.S. central bank then available to act as a lender of last resort, Morgan gathered bankers, examined institutions, and helped arrange emergency financing.
His intervention did not eliminate every failure, and the New York Stock Exchange suffered severe pressure, but it helped prevent a still wider collapse. The episode demonstrated the danger of relying on one private financier during a national banking emergency. Investigations and reform efforts followed, contributing to the creation of the Federal Reserve System in 1913. J. P. Morgan is therefore associated with the rescue, not with inventing the panic itself.