J. P. Morgan helped organize the 1907 rescue of the New York banking system.
The Panic of 1907 began after a failed attempt to corner shares of United Copper Company damaged confidence in trust companies. Depositors rushed to withdraw funds, and the crisis spread through New York’s financial institutions. The Knickerbocker Trust Company failed on October 22, increasing the panic.
J. P. Morgan, then one of America’s most powerful bankers, gathered other financiers, examined institutions’ books, and arranged emergency loans. He also pressured banks and trust companies to cooperate and helped secure funds for the New York City government.
The crisis demonstrated the weakness of the United States financial system, which lacked a central bank capable of acting as lender of last resort. The Federal Reserve System was created in 1913, partly in response to lessons from the panic. Morgan did not act alone; other bankers and government officials were also involved.