operation of the American capital market in the final decades of the nineteenth century was the target of much Populist invective. It is thus unsurprising that the subject has sustained the interest of economic historians. Kenneth Snowden's thoughtful article in this issue of the JOURNAL is the latest in the series of histories analyzing the efficiency and allocative effects of nineteenth-century U.S. financial markets. As Snowden notes, the mortgage market has been neglected compared with other financial markets. His piece and mine appear to be the only recent contributions to take it as their focus.' Where I conclude that risk-adjusted interest rates were on average little different in the Northeast than in the rest of the country, Snowden argues that Substantial regional differentials in mortgage rates persisted throughout the postbellum period in both farm and home mortgage markets.2 I did not discuss the urban mortgage market in my paper, so I shall say nothing about it here. Snowden's evidence on home mortgages throws new light on a heretofore neglected dimension of the nineteenthcentury U.S. capital market. His finding that the urban market was more highly segmented than the rural market is provocative, although not necessarily at variance with my conclusions. There are three reasons why, in his analysis of farm mortgage interest rates, Snowden concludes in favor of more substantial market imperfections than I did. First, he and I differ in the interpretation we attach to transactions costs in characterizing the competitiveness of the market. Second, he downplays the role of usury ceilings, which figure prominently in my analysis. Third and most fundamentally, Snowden's analysis omits critically important variations across regions in the risks of farming and hence in the risks of foreclosure for which lenders demanded compensation. Before elaborating these differences, it is worth emphasizing the extent of our agreement. Snowden and I agree that there is little evidence that mortgage interest rates in the South and West were artificially elevated by lenders possessing market power. As Snowden puts it: The evidence does not support the farmers' allegations concerning monopoly power...... We even agree that areas existed where mortgage rates were higher than can be explained on grounds of risk alone. startling inference, attributed to me, that the farm mortgage market was perfectly integrated by 1890 is Snowden's, not mine.4 I attempted to determine whether an interest-rate differential existed between the nine North Atlantic states and the rest of the country, which is the way I formalized Populist complaints of southern and western monopoly power. I did not set out to test for the total absence of variation across states in risk-adjusted interest rates-what Snowden refers to as a perfect market. In my table 5, I report risk-adjusted mortgage rates for 47 states, so readers interested in testing hypotheses other than those I formulated can do so. To take one example, Californians will find themselves unable to reject, at the 95 percent level, the hypothesis that risk-adjusted interest rates in