J. P. Morgan helped stabilize U.S. banks during the Panic of 1907 by organizing private emergency support.
The panic began after a failed attempt to corner shares of United Copper Company triggered a run on Knickerbocker Trust, one of New York’s major trust companies. Depositors withdrew funds from other institutions, and credit markets tightened. At the time, the United States had no modern central bank to act as an emergency lender.
Morgan convened bankers in his library and pressured financial institutions to provide liquidity. He also examined the books of threatened companies, arranged loans, and helped secure support for the New York City government. His intervention helped stop the panic, although the episode demonstrated that relying on one private financier was dangerous.
The Panic of 1907 directly influenced the creation of the Federal Reserve System in 1913. Morgan’s role is sometimes overstated: he did not personally rescue every bank, but he coordinated a wider banking response.