This $10 note was printed for the Kentucky Stock Bank, which was
not located in Kentucky but in Columbus, Ind. Notes issued by
the bank were secured by state “stocks” (bonds) that the banks’
owners purchased and deposited with the auditor of state. This
particular bank chose to use bonds from the state of Kentucky to
secure its circulation, thus the name of the bank. So, why was
the Kentucky Stock Bank located in Columbus, Ind.? Like so many
questions about obsolete paper money, a straightforward answer
exists. The Kentucky Stock Bank was one of a large number of
“free banks” originally authorized under legislation in 1852.
The circulation was secured by state or federal “stocks”
(actually bonds) that the banks’ owners purchased and deposited
with the auditor of state. In theory, if a bank failed, the
bonds would be sold and the proceeds would be used to redeem the
notes. This particular bank chose to use bonds from the state of
Kentucky to secure its circulation, thus the name of the bank.
The Kentucky Stock