Here's some references older than EtymOnline's 1853. I think they're are used as an abbreviation of lunatic.
The cabinet of instruction,literature,and amusement: Volume 1, 1829:
A country looney, soft as boiled peas, went to a neighboring village
one Sunday last autumn, partly on business and partly on pleasure. As
Sunday is Cupid's market day, he, to his inexpressible joy, fell in
with a charming damsel, ...
Sea songs, tales, etc. by Ned Halyard, 1849:
What's done is done, — and I am done
Brown by a thundering looney ;
By jove, it would be capital sport
If the dish'd could run off with the spooney.
Here's some references older than the OED's 1872, which are definitely abbreviations of lunatic.
Advocate and family guardian, Volume 31, 1865:
Well, if that ain't looney ; I declare, girls are always getting some
crochet or other in their heads," said Harry, contemptuously. " If
they never get a worse oue than this," said Mrs. Lane, " there's not
much harm done.
Harper's magazine: Volume 35, 1867:
I told him he was a looney to suggest it, and went away seriously contemplating the idea of changing my banker.
The mimic stage: a series of dramas, comedies, burlesques, and farces, for public exhibitions and private theatricals, 1869:
Ha ! ha ! ha ! this Romeo, silly looney,
Has, on old Capulet's daughter, got quite spooney ;
And now to wed her he is nothing loth.
Ha ! ha ! he'll find my fingers in the broth.
Rural and city life : or: The fortunes of the Stubble family, 1870:
"... Ho, ho, ho ! what a billy looney he must be to give that money for a
hape ov ould rub- bidge ! Ha, ha, ha ! his wife wud give him beans
when he took the tubs home, I 'll ingage." " There, there, that'll do,
Biddy. You have laughed quite enough. ..."
Dublin University magazine: a literary and political journal, Volume 77, 1871:
Gazing on the intruder, whom he did not at first recognise, he
faltered : " You looney ! ... Are you mad, Looney ?" "Blood and
thunder! To be sure I am ; or I should be if I let you and Colonel
O'Dywer have it all your own way. ...
The West Point scrap book: a collection of stories, songs, and legends of the United States military academy, 1871:
... and my only regret is that I am not in a " Lunatic Asylum," for
there I could " while the fearfully weary hours away," in watching the
eccentric performances of individuals more " looney " than myself; but
under the existing ...
The Alaska herald: Volumes 4-6, 1871:
We are sorry the author of the following story did'not send us his
name, as some people are uncharitable enough to suggest that two-
thirds of the tales of this kind are fabrications, and the remainder
the product of " looney " fancies ...
History of a trip to the great Saginaw Valley, June, 1871, by invitation of the Fort Wayne, Muncie, and Cincinnati railroad, and with the co-operation of the Bee line, Fort Wayne, Jackson and Saginaw, and Jackson, Lansing and Saginaw railroad companies, 1871:
"Where's the wilderness?" I asked, as we made our way through smiling villages and luxuriant farms. What a looney I must have seemed to the engineer, who laughed, but
made no talk.
Finally, here's an 1885 definition of luny.
The progressive dictionary of the English language: a supplementary wordbook to all the leading dictionaries of the United States and Great Britain, 1885:
Luny a. Unsound in mind ; crazy; loony. [Low. U. S.]
