J. P. Morgan’s rescue of the 1907 U.S. banking crisis helped inspire the Federal Reserve.
The Panic of 1907 began after a failed attempt to corner shares of United Copper Company. The failure spread to trust companies, especially after depositors lost confidence in the Knickerbocker Trust Company of New York and withdrew funds.
J. P. Morgan organized private bankers, examined institutions’ finances, and arranged emergency support for threatened companies. His intervention helped prevent a broader collapse, but it also demonstrated how heavily the country depended on one private financier during a panic.
Congress later created the National Monetary Commission to study banking reform. The Federal Reserve Act of 1913 established the Federal Reserve System, giving the United States a permanent central institution intended to provide a more systematic response to financial crises.