The demise of Overend Gurney

Quarterly Bulletin 2016 Q2
Published on 05 July 2016

Overend gurneyBy Rhiannon Sowerbutts, Marco Schneebalg and Florence Hubert

150 years ago, Overend Gurney, the largest discount house in the City of London, suspended payment. The Times immediately christened this date ‘Black Friday’ due to the financial panic that ensued.

The Bank of England, a private bank at the time, refused assistance to Overend Gurney but supported the refinancing of viable banks and brokers by depleting its own reserves. This lending by the Bank of England led to valuable debates around optimal central bank lending and limited liability. There are several lessons which remain relevant today.

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