The New York banking panic eased by J. P. Morgan’s private rescue efforts was the Panic of 1907. The crisis began after a failed attempt to corner the stock of United Copper Company caused runs on trust companies connected to the speculators.
Confidence deteriorated rapidly in October 1907. Depositors withdrew funds, banks restricted lending, and the New York Stock Exchange experienced severe pressure. Because the United States lacked a modern central bank, emergency coordination depended heavily on private financiers and clearinghouse institutions.
J. P. Morgan gathered bankers and examined institutions that needed support. His group helped arrange loans and deposits, while the Treasury provided additional assistance. These actions helped stop the immediate panic, although the wider economic downturn continued.
The episode convinced many policymakers that the country needed a more flexible emergency-reserve system. The Federal Reserve System was created in 1913, five years after the panic. Morgan’s role was important, but the rescue also involved banks, trust companies, and government officials.