Using a hand grater or food processor, grate the potatoes. Wring dry in a dish towel. Put into a mixing bowl, and toss with onion, eggs, baking powder, and flour. Mix well. Season with salt and pepper.
In a large skillet, over medium-high heat, cover the bottom with 1/2-inch of oil. When the oil is hot, spoon 2 tablespoons of the filling into individual cakes. Using the back of the spoon, flatten each pancake. Pan-fry until golden brown on each side, about 2 to 3 minutes. Remove from the oil and drain on paper towels. Fry the cakes in batches and do not over crowd the pan.
To serve, place a dollop of the applesauce or sour cream and caviar in the center of each latke. Place the latkes on a platter and serve warm.
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