In chapter 13, Stanley finds a gold lipstick tube with a heart on it and the initials KB inside the heart. Stanley speculates that the initials might be those of Kate Barlow.

Kate Barlow used to be a schoolteacher in the town of Green Lake, but she became an outlaw after her lover was murdered. She would kill men and leave a lipstick imprint on the mouths of those men. She thus became known as Kissin' Kate Barlow. She would also take money from these men. At one point she buried a lot of the money she stole somewhere in Green Lake.

The Warden has the boys digging holes all day not as a disciplinary exercise, as Mr. Pedanski tells them, but rather because she wants to find Kate Barlow's buried treasure.

Therefore, the initials on the lipstick tube that Stanley finds are significant because they suggest that perhaps Kate Barlow's treasure might be buried somewhere close by.