What was J. Pierpont Morgan's role in stopping the Panic of 1907,
and how did it shape the US economy?
In the fall of 1907, the world was on the verge of economic collapse.
U.S. and international markets had been wildly unsettled for months.
Six months earlier, the American stock market had crashed, despite record corporate earnings,
and stocks also plummeted on several foreign exchanges.
When stock prices plunged again in the summer the estimated loss was $1 billion.
Surprising as it may seem, the U.S. had no central bank to deal with the financial crisis, and no money in reserve.
As panic increased, customers rushed to their banks to withdraw whatever money remained.
People sat overnight in camp chairs, bringing food and waiting for the banks to open in the morning.
Some even earned up to $10 a day holding places in line.
Banks took unconventional measures to deal with the crisis
tellers slowly counted out money to limit withdrawals
and some banks prominently displayed piles of cash in order to reassure worried customers.
To stem the panic, it was critical that someone with influence and insight come to the rescue.
And the person who stepped in was J. Pierpont Morgan.
At the time, Morgan's firm, J.P. Morgan & Co., was the country's preeminent private bank.
More importantly, Morgan had experience with similar financial crises,
having rescued the U.S. Treasury during the Panic of 1893.
He had become the lender of last resort.
So in October 1907, the semi-retired Morgan called together New York's leading bankers
to his library on East 36th Street in midtown Manhattan.
For two weeks, he led a team raising capital for the failing markets,
contributing large sums of his own money, and functioning as the country's de facto central bank.
Although the actual panic lasted only a few weeks, its aftermath brought on
an economic decline that destroyed banks and other businesses and created mass unemployment.
Financial experts consider Morgan's impressive handling of the Panic as the work of a bold financier
who clearly understood the big picture and took decisive action.
In 1908, Congress passed a Currency Act,
allowing banks to form reserve associations that could issue money, temporarily, in economic emergencies.
And, in 1913, shortly after Morgan's death, the U.S. established its
much-needed central bank: the Federal Reserve.
For more infomation >> Piers Morgan Insults Every World War II Vet – Furious Americans Respond With Incredible Force - Duration: 5:25. 
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