J. P. Morgan’s rescue of failing banks helped calm the Panic of 1907 in the United States.
The panic began after an attempt to corner the stock of United Copper Company failed in October 1907. Depositors then rushed to withdraw money from trust companies, institutions that held fewer cash reserves than conventional banks and were less tightly regulated.
Morgan, already one of the country’s most powerful bankers, organized emergency meetings in his library and helped arrange loans and other support. His intervention helped prevent the crisis from becoming even more destructive, although several financial institutions still failed.
The panic exposed weaknesses in the American banking system. It contributed to the creation of the Federal Reserve System in 1913, which became the country’s central banking authority. Morgan did not single-handedly solve every problem, but his coordinated emergency financing was central to the response.