J. P. Morgan helped stop the Panic of 1907 by organizing private support for troubled banks.
The Panic of 1907 began after a failed attempt to corner the stock of United Copper Company. The failure triggered runs on trust companies, especially the Knickerbocker Trust Company in New York. Because the United States had no modern central bank, emergency liquidity could not be supplied by a Federal Reserve system.
J. P. Morgan gathered bankers in his library and pressed them to provide funds, guarantees, and coordinated support. He also helped arrange financing for the New York City government when falling tax receipts and tight credit threatened municipal payments.
Morgan did not single-handedly solve every part of the crisis, but his intervention was central to restoring confidence. The panic helped persuade American policymakers that a permanent lender of last resort was needed. The Federal Reserve System was created in 1913, several years after the crisis.