William E. Burlock and John L. Hathaway, both of Milwaukee, filed to organize the Bank of Owatonna on September 8, 1858 with a capital of $25,000. It first issued notes on March 3, 1859. By June the capital stock was sold to John W. North and R. M. S. Pease. Pease, of the Saint Paul brokerage firm of Pease & Chalfant, was a large dealer in Minnesota Railroad Bonds, and sponsored several state banks that relied solely on them to back their circulation. The Bank of Owatonna was one of their holdings, and operated solely to intermediate railroad bonds.
On July 15, 1859 the bank refused to redeem its notes. The auditor eventually redeemed notes at the rate of 20.75 cents per dollar after selling the bank’s collateral securities.
On September 8, 1858 the auditor authorized American Bank Note Company to engrave a 5-10 plate, although a 5-5-5-10 was ultimately prepared. It printed 2,000 sheets amounting to $50,000. A total of $44,600 was issued. Unredeemed notes totaled $1,550. The plates were destroyed by the Auditor’s Office on May 10, 1860. The auditor destroyed $5,350 in remainder notes on June 1, 1860.