ABSTRACT
Economists generally agree that an important characteristic of an advanced economy’s development is the evolution of a national capital market. One way of gauging the unity of capital markets in a geographically large country such as the United States is to see whether interest rates differed among the various regions of the country. In an original article on this question, Davis (1965) provides evidence that regional interest rate differentials in the United States narrowed between 1870 and 1914, and offers his explanation for the evolution of a national market for short-term capital. Subsequent research refines Davis’ interest rate measures and explores a variety of alternative explanations.
