Settlement and Immigration
The conclusion of the War of 1812 removed the British as a permanent presence in the Northwest Territory and greatly reduced Indian resistance to white settlement in the region. During the late eighteenth and early nineteenth centuries, American settlement required resolution of several critical issues. Land surveys, administration of land sales, and establishment of a system of governance had to be established in a manner that both satisfied would-be settlers and addressed the competing claims of various state governments and land speculators. Moreover, the newly created United States government was anxious to take advantage of the region's untapped economic potential. Under the Articles of Confederation, land sales were one of the few ways available for the national government to generate revenue. The United States Congress responded to these issues with a series of legislative acts that created a rational system for organizing and settling the territory, transferring land ownership from public to private hands, and admitting new states into the Union.
FEDERAL LAND LAWS (1785-1820)
Prior to the 1780s, four eastern states claimed portions of the Northwest Territory on the basis of language in their colonial charters. The most tenuous claim was New York's. Under its 1699 charter, New York was granted guardianship over the members of the Iroquois Confederacy. The Iroquois had once included part of the Northwest Territory in their sphere of influence, a state of affairs that had become irrelevant by the late eighteenth century. Consequently, New York ceded its claim to western lands in 1780. Virginia, on the other hand, had the strongest claim to the Northwest Territory, since Virginia's 1609 charter granted it authority over all of the Northwest Territory, as well as portions of present-day Pennsylvania and Kentucky. The commonwealth assumed a large share of responsibility for the military protection of the area during the American Revolution, providing most of the soldiers and material that allowed George Rogers Clark to complete his successful campaign in Vincennes in 1779. In exchange for a reserve of land between the Scioto and Little Miami rivers in eastern Ohio, Virginia agreed to surrender its claims to the remainder of the Northwest Territory; an offer accepted by Congress in 1784. The claims held by Massachusetts to the Northwest Territory were settled in 1785. A year later, Connecticut, too, won a concession of a reserve of land in present-day Ohio. Located in northeastern Ohio, the Western Reserve lay between Lake Erie and the forty-first parallel, and extended 120 miles west from the Pennsylvania border. 
With the issue of western land claims by eastern states resolved, the Federal government possessed all the 265,000 square miles encompassed by the Northwest Territory (Figure 8). Thomas Jefferson headed a committee appointed by Congress to devise a system of government for the area. A revised version of his committee's report, known as the Ordinance of 1784, was passed by Congress in April 1785. The legislation called for the eventual creation of ten states from the area. Upon attaining a population of 20,000 residents, each prospective state would be admitted to the Union. This was the first concrete evidence of the Federal government's intention to treat newly established states on equal terms with the original thirteen states. The Ordinance of 1784 also formalized a number of other basic principles. The new state governments were required to swear permanent allegiance and subordination to the United States; respect the boundaries of Federally owned lands; exempt Federal lands from state taxation; assume a proportional share of the national debt; commit to republican forms of government; and tax resident and nonresident landowners at the same rate. Formal strategies for accomplishing these principles were not laid out in the Ordinance of 1784. Nevertheless, this served as a declaration of Federal authority over the region, with the interests and agents of the United States held supreme above all others. 
THE LAND ORDINANCE OF 1785
Congress established its first public-land policy for the administration and sale of Northwest Territory lands with the Land Ordinance of 1785. This law established that all land would be surveyed into townships with an area of six square miles as soon as questions of Indian title were resolved. Each township would include 36 sections, each containing 640 acres.  The survey was to begin at the junction of Pennsylvania's western boundary with the Ohio River and continue westward. A portion of the Northwest Territory, approximately one-seventh of the total area, was set aside to pay bounties to American Revolutionary War veterans. The legislation also required that one section in each township be set aside for the purpose of establishing and maintaining a public school, marking the first time that the issue of public education was addressed at a national level. Remaining sections of land were to be sold in 640-acre tracts at public sale for not less than one dollar per acre. 
The task of surveying the Northwest Territory was enormous. The work was carried out by hand, and the entire countryside, including swamps, cane breaks, and marshes, was crossed. A survey crew typically consisted of a deputy surveyor, responsible for directing the operation with the use of a magnetic compass; two chainmen, who stretched the traditional four-rod measuring chain on the survey line; at least one flagman to mark the spot toward which the chainmen worked; one or two axmen who cleared the line of vision and blazed corners; and perhaps a hunter and a cook. Although the task was physically arduous, many men competed for surveyors' jobs, since it offered them an opportunity to scout the best land in a given area. 
Surveyors oriented each tract to lines of latitude and longitude based on an arbitrarily placed north-south meridian and an east-west baseline. Numbered range and township lines, running parallel to the meridian and base lines, established the grid of six-mile-square townships. Townships then were divided in the same fashion. Thomas Jefferson has been credited with developing this rationalist approach to surveying, which differed sharply from traditional approaches that relied on the placement of natural features for orientation and measurements. Subsequent legal descriptions for land ownership throughout the Northwest Territory were based upon these land subdivisions. This orderly system was modeled after the New England plan of prior survey, township platting, and granting of a deed in fee simple, and encouraged controlled development and a more compact pattern of settlement.  et Faragher points out that "a persistent traditionalism" was evident in the surveying efforts. Principal meridians usually were started at the mouths of rivers, which played a critical role in the penetration of the Northwest Territory's interior, instead of relying on pure geometry. Township sections were numbered in oscillating rows from left to right and then right to left, in the same fashion as a plow criss-crossed the land. Jefferson's suggestion for use of a decimal system of measurement was, however, overruled in favor of the traditional 66-foot chain, which allowed incorporation of the traditional rod, acre, and statue mile measurements familiar to most nineteenth century Americans. 
This Federal survey method stood in sharp contrast to the more haphazard approach that prevailed in the territory south of the Ohio River, which relied upon a convoluted system of warrants, certificates, caveats, and grants that often obliterated a clear chain of title. The goal of the Federal system was to encourage purchase of land by converting untracked wilderness into an easily traded commodity. The required minimum purchase of 640 acres, however, promoted speculation and precluded many prospective settlers. In response, some established homesteads on land without formally purchasing it, becoming squatters. 
Such illegal settlement in the Northwest Territory had been a significant problem for some time, notwithstanding the hostilities engendered by the American Revolution and ongoing Indian resistance to white settlement. The Federal government viewed squatting with considerable hostility for several reasons. The presence of squatters conveyed a sense of weakness and inefficacy on the part of the United States, since they demonstrated its inability to control territory over which it claimed dominion. Deeply in debt and with minimal resources, the fledgling government further feared that a rapid influx of squatters would provoke warfare with the resident Indian tribes that had so recently allied themselves with the British.  Conflicting popular views of squatters were held. Easterners, for the most part, tended to regard squatters as opportunistic and lawless, while Westerners tended to consider them independent, enterprising, and adventurous.87 These disparate opinions highlighted both regional differences already emerging in the nascent nation and, perhaps, class conflict between entrenched property owners and the landless.
THE NORTHWEST ORDINANCE OF 1787
With passage of the Northwest Ordinance of 1787, Congress established a formal system of governance for the Northwest Territory. The legislation established a single government for the entire territory, with provision for the eventual creation of three to five smaller territories. Each territory would initially be governed by a governor, secretary, and three judges, all of whom were to be Federally appointed. When the population numbered 5,000 free adult males, a bicameral territorial legislature was to be formed. When the total population in the territory numbered at least 60,000 the territory could apply for statehood on an equal basis with the original thirteen states.  Significantly, slavery was prohibited in the Northwest Territory, a condition that would have a significant role in the evolution of the balance of power between free and slave-holding states over the course of the early- to mid-nineteenth century.
As had been the case with the Ordinance of 1784, the Northwest Ordinance reiterated the supremacy of the United States government's authority over the territory. In essence, according to Cayton, the 1784, 1785, and 1787 ordinances "entailed nothing less than the complete transformation of the region . . . they assumed the adaptation of the Indians, the French, and the natural landscape to the economic and political imperatives of the United States."  As such, the Northwest Territory was to serve as an incubator for the political experiment begun with the American Revolution.
Working to the advantage of the United States in its quest for dominion over the Northwest Territory was the existing power vacuum in the region. Construction of military forts heralded the arrival of Federal power, and the army acted as the primary agent for expressing Federal policies to the area's residents, including Indian tribes, French residents, lingering British troops in remote outposts, and illegal settlers. With a few notable exceptions, the Indians displayed an inability to unite against Federal incursions into territory they still regarded as their own. Wartime privations had left the French disillusioned with the British and Virginia (whose government had assumed responsibility for the region during the Revolution). The British were proving reluctant to abandon their northwestern posts, in violation of the terms of the Treaty of Paris. Settlers, finally, were too few and had no legal standing in the region. In the absence of effective opposition, the United States was able to convey the illusion of being both a dominant force and an arbiter of disputes among the various parties, primarily through the actions of its military and the territorial government. 
The first governor of the Northwest Territory under the 1787 ordinance was Arthur St. Clair. A Scotsman whose career included military service in the French and Indian War, service on George Washington's staff during the American Revolution, and a stint in Congress, St. Clair proved an unpopular choice for the position. His condescending manner and propensity for arbitrary judgements led many to liken his manner to that of the royal governors prior to the Revolution. The 1791 defeat of military forces under his command by Indian tribes further eroded his reputation. He remained, however, governor of the territory until 1798, when a sufficient population was achieved to divide the region into two territories. The eastern division ultimately became the State of Ohio in 1803. The western division was the Indiana Territory, and extended from the west boundary of Ohio to the Mississippi River, and north from the Ohio River to the Canadian border. 
THE LAND ACT OF 1800 AND THE INTRODUCTION OF A CREDIT SYSTEM
Disposition of land remained a critical issue in the Northwest Territory in the late 1790s. Jay's Treaty of 1796 finally resolved the lingering issue of British outposts in the region. The Greenville Treaty cleared title to the southern two-thirds of Ohio, as well as approximately 25,000 square miles in southeastern Indiana. With this resolution of two significant obstacles to legal settlement, and with illegal settlement continuing at a rapid rate, the question of administration of land sales north of the Ohio River was again raised. In 1796, Congress passed new legislation to address land sales, but made few changes to the procedures established in 1785. The rectangular system of surveying was made permanent. The price per acre was increased to two dollars, while the minimum land purchase remained 640 acres. Sales continued to be made at public auctions in the East, with prospective settlers often bidding against speculators with much deeper capital reserves. Under the leadership of William Henry Harrison, who served as congressional delegate for the Northwest Territory during the 1790s, Westerners began to lobby increasingly for smaller tracts, lower prices, a credit system, and preemption rights. 
Congress eventually responded with the Land Act of 1800. This law created a system for the relatively simple, legal acquisition of Federal land by private individuals. To administer the process, four land sale offices were opened within the Northwest Territory, at Chillicothe, Marietta, Steubenville, and Cincinnati. Each office included a staff of two officers; a registrar who recorded applications and land entries, and a receiver who handled financial transactions. A credit system was introduced. Although the price remained two dollars per acre and the minimum purchase remained 640 acres, an applicant had forty days to pay one-fourth the total price, two years to pay another quarter, three years for the third quarter of the purchase price, and four more years to retire the debt. An interest rate of 6 percent was levied on these credit arrangements. 
The legislation proved successful in encouraging more rapid settlement of the Northwest Territory. By the end of the first year under the act, 398,646 acres of land had been sold, at a price of $834,887. With the exception of 1803, sales increased annually each year thereafter, with the peak level of activity taking place in 1805, when 619,266 acres were sold for almost $1.26 million.  This was the year that land in southern Indiana was opened to legal sale for the first time. Although a fair amount of land speculation took place, it generally did not involve large parcels, and less than 10 percent of the land sold in southern Indiana went to speculators. 
The increased level of sales in 1805 resulted from passage of the Land Act of 1804, which reduced the minimum purchase amount to 160 acres, and the establishment of additional land offices at Detroit, Vincennes, and Kaskaskia. Interest was no longer charged to purchasers until after payment was due and several processing fees were also abolished.  This law remained in force for sixteen years, with an amendment in 1808 that raised the price per acre to four dollars. It was this legislation under which Thomas Lincoln filed for his farmstead in Spencer County. Additionally, as previously noted, during this same period, Indiana's territorial governor, William Henry Harrison, negotiated a series of treaties that resulted in Indian cessions of vast tracts in Indiana. These included the 1803 Treaty of Fort Wayne, the 1804 Treaty of Vincennes, the 1805 Treaty of Grouseland, and the 1809 Treaty of Fort Wayne. With these agreements, legal settlement became possible throughout the southern third of Indiana.
In the midst of this progress two critical issues developed that threatened the system of land sales in the Northwest Territory. Thousands of individuals had purchased more land than they could afford, and their forfeitures threatened to destabilize this important source of revenue for the Federal government. In addition to the potential loss of revenue, forfeitures placed the government in the position of initiating unpopular evictions and forfeitures upon settlers in areas where Federal authority remained thinly stretched. Second, national political policy affected the credit system. American trade embargoes against European nations drastically reduced demand for agricultural products, and exports fell from an approximate $30 million annual average at the turn of the century to $5 million by 1808. Congress responded to both these problems with a series of relief acts aimed at preventing forfeitures among farmers and preserving the credit system.  These were generally stopgap measures that temporarily eased the financial crisis without addressing the systemic faults causing the credit system to fail.
The Land Act of 1800 and the introduction of a credit system had the indisputable consequence of encouraging a steadily increasing rate of settlement in the Northwest Territory during the first decade of the nineteenth century. Along with the growth in population and the penetration of white settlement into the interior, the territorial government matured. In 1805, Michigan Territory was created from Indiana, and in 1809 the Illinois Territory was split off, thus establishing Indiana's present boundaries (Figure 9). Appointed by Thomas Jefferson, Harrison served as Indiana's governor from 1800 to 1813.  During this period, Indiana passed through the first two stages of government specified in the Northwest Ordinance of 1787: first, rule by a governor, secretary, and three judges (appointed by the President) and, second, by a bicameral legislature with representatives elected by a landed class of voters.
Last Updated: 19-Jan-2003