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A question on ELU gives some background on the use of looney. Etymonline's entry for bin has "receptacle", "all from L.L. benna 'cart,' M.L. benna 'basket.'"

Loony bin seems to be analogous to police box or paddy wagon. I'm not sure if the "insane" were literally kept in boxes or carted up as the definition implies. If not, why was bin chosen?

Was bin used in similar phrases or contexts, or was it just a unique construction that caught on?

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I think "bin" refers to the "asylum" in this case (i.e., the insane asylum). – J.R. Sep 8 '12 at 17:52
@J.R. Well, I assume it's either "asylum" or "ward" as you state, but I'm curious if there was a history of extending the definition that far. For instance, I've seen a money bin from at least as early as 1951. I'm not sure if it was inspired by "loony bin" or if "bin" often referred to any kind of structure or warehouse. – Zairja Sep 8 '12 at 17:58
A bin is a place to store things, including unwanted things. A loony bin is a place to store the loonies. – Roaring Fish Sep 8 '12 at 18:05
@RoaringFish That looks like an answer. – SevenSidedDie Sep 8 '12 at 18:07
@J.R. ... or farm, as in funny farm. – coleopterist Sep 8 '12 at 18:56
up vote 1 down vote accepted

A bin is an enclosed place for storage, such as a coal bin.

From Merriam-Webster:

Etymology:Middle English binne, from Old English binn, binne manger, basket, probably of Celtic origin; akin to Gaulish benna two-wheeled cart with a wicker body; akin to Greek phatn* manger, Old English bindan to bind * more at BIND

: a box, frame, crib, or enclosed place used for storage coal bin *apple bin* grain bin

The OED says the receptacle meaning is used "in the most diverse senses" and gives examples storing grain, straw on a farm-yard, a partition in a barn, manger for animals in a barn, and a receptacle for storage of food ("corn, meal, bread, fruit") and later other things like dust and coal.

Interestingly, the following was only added to the OED as a draft addition in 1997 and first quoted in 1972:

Any receptacle for holding rubbish or waste, esp. waste paper; a waste-bin.

1972 T. Stoppard Jumpers i. 23 Crouch enters from the Kitchen, carrying a bin of rubbish and several empty champagne bottles.

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