The Panic of 1907 was the economic shock that sent waves of banking reform throughout the country. It was responsible for American politicians and Wall Street bankers beginning to work together to find solutions to the rigid American monetary system. The 1910 meeting on Jekyll Island, the Aldrich Bill of 1911, and the Aldrich–Vreeland Emergency Currency Act of 1908, and the Federal Reserve Act were all responses to the Panic and its fallout. “Central” and “Banking” were two dirty words before 1907. But, the Panic changed that forever.

The commonly known story of the Panic is that in October 1907 an attempt by an overzealous Wall Street banker to corner the copper market led to a run on many major banks. The effects of the run caused a panic that reverberated throughout Wall Street and the rest of the US banking and manufacturing industries. At the height of the Panic, J. P. Morgan stepped in to aid the banking community and quell the massive drop in bank reserves and avert market collapse. He was touted as a true patriot and selfless beacon of financial hope for the country.

Compared to the panics of 1837, 1857, 1873 and 1893, the Panic of 1907 was by far the most volatile. The major companies that were affected included Amalgamated Copper, US Steel, and the railroads of New York Central, Pennsylvania, Reading, Southern Pacific and Union Pacific. The market began to drop ten months before the actual panic, with tremendous stock disposals throughout the span of January to October 1907. From 18 February to 14 March, the market dropped 29 points. In March, Secretary of the Treasury George B. Cortelyou provided a stimulus of $71 million after the first large drop in the market. The New York bankers were expecting much more, so they were unable to hold off the second hit that occurred in August because of the mass buying of low-priced securities in March and the subsequent short sales over the summer. The fall of 17 points that followed from 29 July to 15 August hurt even more because the securities that were purchased low in March were now even more undervalued.