The 1866 financial crisis that followed the collapse of London bank Overend, Gurney and Company was the Panic of 1866.
Overend, Gurney and Company had begun as a bill-discounting partnership and became one of Britain’s largest financial institutions. It converted into a limited company in 1865, but losses connected with railway and other investments damaged its position. The bank suspended payments on 10 May 1866, causing panic in London’s money market.
The Bank of England responded by lending freely after the government temporarily suspended the Bank Charter Act’s restrictions on note issuance. This helped prevent a broader collapse, although many businesses failed and credit conditions tightened.
The panic also affected markets outside Britain, including Italy. It is often remembered as an important test of the central bank’s lender-of-last-resort role. The event was distinct from the later Panic of 1873, which began amid a different wave of railway speculation and financial failures.