It has been customary in economic discussion to direct attention toward the nation. Where generalizations of a broad character have been undertaken, the nation has commonly been their subject. Such an approach assumes that the nation forms the basis of a homogeneous market in which the forces of supply and demand interact in such a way as to produce a single price for each particular commodity or service. There is reason to believe, however, that the bounds of the nation are not always coterminous with the limits of the broadest single market within a country. To be sure, there are certain genuine national markets within a country, such as the market for wheat, or other staple commodities; but this condition does not hold good for all commodities or services. Consider the market for short term funds. Can it be said that a broad national market for such funds exists? Probably not. The banking system of the United States, as the principal factor in the market for short term loans, displays a considerable degree of differentiation. With its twelve Federal Reserve districts, the banking system of America presents no simple picture. By the same token, the groups of interest rates within the banking system form a complex pattern. It is the purpose of the present paper to analyze the regional pattern of interest rates, and to investigate the relationships inherent in the pattern. Such an investigation involves two elements: first, a descriptive analysis of the regional pattern of interest rates; second, an analysis of the factors causing the several interest rates to assume the observed configuration.' Accordingly, our investigation will first be directed toward the exposure of the actual regional structure of interest rates in the United States. To build up a proper picture of the situation it is necessary to know three things: (1) the relative position of the several sections in the scale of rates, and the change in such relationships through time; (2) the general trend of differentials in these regional rates through time; (3) the nature of cyclical variations in differentials.