Which bank’s 1866 collapse helped trigger the London-centered Panic of 1866?

Overend, Gurney and Company’s collapse helped trigger the London-centered Panic of 1866.

Overend, Gurney was a major London discount house, handling bills of exchange and short-term credit. It had expanded into riskier railway and infrastructure lending, and losses from the firm’s investments damaged confidence. On 10 May 1866, the company suspended payments, prompting a banking panic and a rush for liquidity.

The Bank of England responded by lending aggressively after the government authorized a suspension of the Bank Charter Act’s normal note-issue limit. That decision helped prevent the panic from becoming an even broader collapse. The crisis also affected banks and financial institutions outside Britain, including firms connected to European markets.

The event illustrates why a discount house could matter as much as a conventional deposit bank in nineteenth-century finance. Overend, Gurney was not the Bank of England, and its failure did not mean the central bank itself had failed. The episode strengthened the idea that a central bank could act as lender of last resort.