The New Deal carried federal administration to the roots of American society. Activities that had never before been the concern of the national government came under federal scrutiny and local autonomy contracted. Although federal officials seldom possessed executive power in the states and formal respect was paid to local responsibility, a system of parallel government developed in which traditional authorities continued to function but the most important decisions were made in Washington. Nowhere was parallel government so clearly illustrated as in relief administration.

The new act followed closely the original LaFollette-Costigan bill, but with the modifications suggested by Hopkins and endorsed by Roosevelt. The RFC was authorized to borrow $500,000,000 for relief, but expenditure from this fund was the exclusive responsibility of a new Federal Emergency Relief Administration (FERA). A grant of $200,000,000 was allocated to the states, each receiving a grant equal to one-third of its expenditure on relief during the preceding three months. The allocation by population had been dropped and relief expenditure emerged as the basic measure of need. Subsequent interpretation of this section made it clear that only the expenditure of public money could be taken into account, but that loans received from the RFC could be included. The remaining $300,000,000 (significantly, it was now the larger portion) formed a fund at the disposal of the federal relief administrator from which he could make discretionary grants “sufficient to provide an adequate standard of relief.”