In the summer of , the American economy was showing signs of weakness as a number of business and Wall Street brokerages went bankrupt. Treasury pumped millions of dollars into weak banks in the hope of saving them, but the string of collapsed institutions lengthened.

The Panic of

In a reprise of his role during the second Cleveland administration when the gold standard was under assault, J. Morgan acted to restore order. He summoned the leading bankers and financial experts to his home where they set up shop in his library. Over the course of the next three weeks, Morgan and his associates labored to channel money from the strong institutions to the weaker ones in an effort to keep them afloat.

While the crisis passed, the finger-pointing began. Reform elements of both political parties believed that the American banking system was fundamentally flawed and needed wholesale change. Business leaders, however, held that Roosevelt's progressive legislation had upset the natural order of the economy and the government should stop its meddling.

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Following the Panic of , the reform elements gradually gained the upper hand. An emerging consensus affirmed that thorough bank reform was necessary to provide badly needed currency elasticity a major issue in the Panic and the general soundness of the banking system.

Congress responded by passing stop-gap legislation, the Aldrich-Vreeland Act , until more thorough actions could be prepared. With the passing of the Owen-Glass Federal Reserve Act of , the Federal Reserve System was created.

The "Fed" was designed to be flexible and responsive to the economy and independent of politics. The Fed has evolved through the years by implementing many strict checks and balances.

Educate Yourself - J.P. Morgan - Savior -- The Panic of

As a result, the American economy, and American society are more stable. See other Theodore Roosevelt domestic activity.

Westinghouse Electric was the victim of foul business practices by J. Morgan and Edison strove for control of all electrical power in America.

Edison used deceptive demonstrations of the supposed increased dangers of AC and Morgan had spread rumors in Wall Street that Westinghouse was insolvent, causing Westinghouse stock to collapse, along with the stock of the Westinghouse backers.

The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance by Ron Chernow.

The winner of the National Book Award and now considered a classic, The House of Morgan is the most ambitious history ever written about an American b Capitalism, Democracy, and the Hundred Years' War Over the American Dollar by H. An "insightful" Publishers Weekly history of the development of American capitalism and the men who made it great.

The Panic of | Federal Reserve History

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