How George Peabody’s firm became ensnared in the panic, jeopardizing Junius’s new partnership with Peabody and Morgan’s training there. The first test of Morgan’s mettle: Could he meet the challenge of a financial crisis? He showed deep empathy and compassion for his father’s anxiety and discomfort as Junius and George Peabody managed their way through the crisis. Father told him in 1857, “You are commencing upon your business career at an eventful time. Let what you now witness make an impression not to be eradicated. In making haste to be rich how many fall; slow and sure should be the motto of every young man.”

The purpose of our book is to chronicle and analyze Morgan’s interventions in financial crises, telling the story of how he learned the art of last resort lending by trial and error, and finding its relevance to issues that last resort lenders still face in the early twenty-first century. We classify Morgan’s last resort loans into three types.

Most stories of the Panic of 1907 end with activities in December 1907. To truly understand, however, what being a private lender of last resort must have meant to Morgan, we extend the story well into 1908. To close out the story, we track what he did to clean up his own firm and other firms after the crisis, revealing substantial losses well beyond any he had incurred in previous dealings.

The arc of our story will show how Morgan evolved from being primarily concerned with providing aid to firms who were his customers to providing aid to the whole system, less centered on individual companies.

We have analyzed how Morgan learned to link the three pools of global reserves during American crises, and the Panic of 1907 was no different. Morgan’s lender of last resort skills were on full display during the panic, the last and most severe of the National Banking Era panics. We analyze sixteen last resort activities (eleven domestic, five international) led by Morgan coordinating the three detached sources of liquidity.

With Congress unwilling to authorize another public loan, the proceeds of which would be intended to buy much needed gold for the Treasury, Cleveland and Carlisle cast about for other ways to secure financing. Morgan would eventually create three additional transactions to stave off populist attempts to pursue a full-fledged bimetallic currency regime: one would be accepted, one would be rejected, and one would be executed without government request, approval, or oversight.

Farmers sought relief from the 1893 recession by lobbying for an increase in the money supply from newly mined silver. Railroads sought relief by reorganizing their debt, through extended maturities and combinations of smaller roads with larger ones. The specter of bimetallism in the US added to the financial uncertainty following the Panic of 1893 for European investors who became increasingly worried that US debtors would pay them with silver instead of gold. A slow-motion run on the US Treasury’s gold began and then gained steam. Morgan’s own business was not insulated from the turmoil surrounding the Treasury’s gold reserves.

We find it plausible that Morgan’s recurring ability to include subject matter experts in routine syndicates could have been applied to the task of coordinating lender of last resort facilities. This provides at least one plausible explanation for how he developed the skills to act as lender of last resort in the American setting that did not include a central bank.