J. P. Morgan helped stop the Panic of 1907 by organising private support for banks and trust companies.
The panic began after a failed attempt to corner the shares of United Copper Company. When the scheme collapsed, depositors withdrew money from institutions connected to the participants. Fear spread through New York’s banking system, and the New York Stock Exchange faced a severe liquidity shortage.
Morgan gathered bank presidents, examined institutions’ books, and arranged loans and deposits to prevent additional failures. He also committed his own funds and persuaded other financiers to provide capital. A dramatic episode occurred when he kept bankers and trust executives in his library overnight until they agreed to a rescue plan.
The crisis exposed the weakness of a financial system without a U.S. central bank. Congress later created the National Monetary Commission, and its work helped lead to the Federal Reserve Act of 1913. Morgan’s role was influential, but government officials, clearinghouses, and many other banks also contributed to stabilisation.