In 1918, Minnesota county superintendent Julius Arp argued that the greatest educational problem facing the American people was the Rural School Problem, saying: "There is no defect more glaring today than the inequality that exists between the educational facilities of the urban and rural communities. Rural education in the United States has been so far outstripped by the education of its urban centers, that from an educational standpoint, the country child is left far behind in the struggles of life." This article first examines the "discovery" of the Rural School Problem as an urgent national problem that required local and ultimately state responses. It then explores how most state legislatures and bureaucracies assumed responsibility for "equalizing education" by using state aid and standards to stimulate local development and encourage compliance. Next, it examines the expansion of state education bureaucracy and analyzes the ways in which the ideological, political, and legal power of local control shaped its contours. It concludes by considering the challenges and limitations posed by this negotiated local-state relationship. (Contains 100 footnotes.)