J. P. Morgan helped stop the Panic of 1907 by organizing private bank support for the markets.
The panic began in October 1907 after an unsuccessful attempt to corner the stock of United Copper Company. Depositors then rushed to withdraw money from trust companies, especially in New York. Because the United States had no central bank, the financial system lacked a public institution able to provide emergency liquidity.
Morgan used his authority, money, and relationships with major bankers to coordinate loans and persuade institutions to keep operating. He also helped arrange support for the troubled Knickerbocker Trust Company and later for New York City. The crisis eased after several weeks, but it exposed weaknesses in the American banking system.
A common mix-up is to call Morgan the government’s official rescuer. He was a private banker; the Federal Reserve was created in 1913 partly in response to lessons from this panic.