The Panic of 1866 was the London exchange crash that followed the failure of Overend, Gurney and Company.
Overend, Gurney and Company, formerly a major bill-discounting house, suspended payments on 10 May 1866. Its failure caused panic in London’s financial markets because the firm had been regarded as a powerful and trusted intermediary. Investors rushed to withdraw funds, while share prices and confidence fell.
The Bank of England initially faced pressure from depleted reserves, but the government authorized it to exceed the normal limit on note issue under the Bank Charter Act. That emergency step helped prevent a wider collapse in the payments system, although many companies and banks still failed.
The episode helped establish the modern central-bank role of lender of last resort. It is sometimes confused with the Panic of 1873, which began with the Vienna Stock Exchange crash and involved a separate international wave of financial distress.