J. P. Morgan became the central rescuer during the Panic of 1907, a crash that threatened several U.S. banks.
The panic began after a failed attempt to corner the stock of United Copper Company undermined confidence in New York’s trust companies. Depositors rushed to withdraw money, and the crisis spread through financial institutions and the stock market. With no U.S. central bank then available to provide emergency liquidity, private intervention became crucial.
Morgan organized bankers, examined institutions, and committed funds to stabilize the system. His library reportedly served as a meeting place during the emergency. The panic helped persuade American policymakers that the country needed a formal lender of last resort. The Federal Reserve System was created in 1913, five years after the crisis. Morgan’s role is sometimes described as a government bailout, but he was a private banker coordinating other financiers.