7. The Old Northwest
With the cession of the claims of Virginia and other states to the lands of the Old Northwest, and the passage of its Ordinance of 1784 (applying to all western lands), Congress had nationalized the public domain and pledged itself to allow full self-government to any settlers of new territory whenever the territory should amass a population of 20,000 or more. New states were to be carved out of these territories when their population equaled that of the free citizens of the smallest of the existing states.1
On May 20, 1785, Congress adopted the Ordinance of 1785, which elaborated a detailed policy for Congress on surveys and sales of the western lands. The Ordinance provided for congressional surveyors to map out the land before sale, and for the land to be divided into New England-style “townships” and parceled out into rigid rectangular surveys of six square miles in the New England fashion. This contrasted to the natural boundary method of surveying used in the South. The rigid rectangular method compelled the purchases of sub-marginal land within an otherwise good “rectangle.” Townships would
be divided into minimum units of 640 acre sections, and these sections could be sold at public auction with a minimum imposed price of $1.00 per acre payable in specie or the equivalent in public securities. This minimum land price was high and discouraged settlement as frontier lands in the states were selling on much more favorable terms. Furthermore, each township would be forced to pay $36 to Congress for its (unasked for) surveying. This provision reflected the desire of Congress to milk revenue from the purchasers of western land, a desire that came higher than any attention to the rights or the needs of the settlers themselves. This imposed great hardship on the settlers, and insured that wealthy speculators would buy most of the land tracts. Indeed, large speculative land companies were influential in inducing Congress to set the high minimum price and the minimum acreage for land sales. Four sections of land in each township were to be reserved to Congress, to be distributed as it saw fit, and one section was forced to be set aside for public schools. One-third of the gold, silver, or copper to be found on the western lands was also to be reserved to the sovereign Congress—a policy all too reminiscent of royal reservations in colonial days—but this assertion of power was never applied and became a dead letter. The liberals in Congress, led by David Howell of Rhode Island and Melancton Smith of New York, narrowly managed to expunge a section that would have compelled the establishment of the religion of the majority of the local inhabitants.The relatively liberal Ordinance of 1785, as well as the superior Ordinance of 1784, was a reflection of Virginia’s previous triumph over the powerful companies of land speculators that had dominated the politics of Maryland, New Jersey, and other Middle Atlantic states, but this triumph proved to be short-lived, for there soon followed an orgy of congressional privileges to land speculators. Hardly had Congress begun the laborious process of surveying (which it had insisted on monopolizing) when it controverted its previously moderate liberal policy of land distribution and fell prey to the wiles of new groups of land speculators.
A group of New England ex-army officers of the Revolutionary War, headed by Generals Rufus Putnam and Samuel Holden Parsons, had long intrigued to grab large tracts of western lands. Finally, in 1786, Putnam and Parsons organized a statewide convention in Boston of Massachusetts veterans to form a joint-stock company called the Ohio Company of Associates (no connection with the pre-revolutionary Ohio Company formed by Virginia speculators). The new Ohio Company asked for the huge grant of one million acres. When Parsons’ request made little headway, the company sent one of its organizers to lobby Congress, the Reverend Manasseh Cutler of Ipswich Village, Massachusetts, former lawyer and army chaplain. Cutler’s wily lobbying made a deep imprint upon Congress, whose president was the highly receptive General Arthur St. Clair, an old-time Pennsylvania speculator in western lands and one of the leaders of the diehard conservative Republican Party in Pennsylvania. Cutler cemented his success by linking his fortunes to the New York reactionary William Duer, an old business associate of Robert Morris and the powerful secretary of the Board of the Treasury established by Congress. The influential Duer, who would handle the financial arrangements of the mammoth land sale, was eager to acquire a million or more acres of Ohio land east of the Scioto River and west of the Ohio Company tract. Linking forces, Cutler and Duer—over the impassioned objections of New York’s radical Congressman Abraham Yates—pushed through Congress in the autumn of 1787 a gigantic deal for land monopoly. Cutler and the Ohio Associates were sold a huge tract of 1.5 million acres in Ohio, partially payable in land bounty certificates owed to the Continental Army, certificates that were selling for ten cents on the dollar on the open market. As a result of this and other special deductions, the Ohio Company was allowed to pay for their huge tract of land eight to ten cents an acre, in contrast to the one dollar required of ordinary purchasers of smaller sections at public auction. Thus were the at least moderately liberal provisions of the Ordinance of 1785 swept away on behalf of these influential land monopolists. Even more monopolistic was the similar privilege granted to Duer’s “Scito Project,” which bought nearly 3.5 million acres along the Ohio River of land originally arranged for Cutler. Much of the initial payment by Cutler, which launched the contract, was secretly advanced to him by Duer.
In order to cement these speculative projects, something had to be done to fasten the rule of the land companies over the western settlers. As a result, Cutler was instrumental in changing America’s entire land policy by replacing the Ordinance of 1784 with the Ordinance of 1787. Thomas Jefferson’s highly liberal Ordinance of 1784, allowing full self-government to settlers as soon as a territory reached a population of 20,000, greatly inconvenienced the land companies, for it meant that Congress and its favored land speculators might lose control of the West to the actual settlers. Indeed, settlers were increasingly squatting and developing western land in complete disregard of Congress or the land companies, thus challenging the authority of both august institutions. As early as 1785 Congress prohibited all settlement north of the Ohio River and soon sent troops to the frontier to burn the cabins of the squatters. But the settlers stubbornly returned to their lands when the troops departed. One settler put the case for all of them with great cogency:
All mankind … have an undoubted right to pass into every vacant country, and to form their constitution, and that … Congress is not empowered to forbid them, neither is Congress empowered from that Confederation [of the U.S.] to make any sale of the uninhabited lands to pay the public debts, which is to be by a tax levied and lifted by the authority of the legislature of each state.2
The Northwest Ordinance, satisfying the aims of the land companies, was adopted on July 13, 1787, to apply only to the territory north of the Ohio River. While the system of land sales was continued along the lines of 1785, settler self-government was replaced by territorial government in the hands of Congress. Specifically, Congress would appoint a governor, a secretary, and three judges to govern and apply any laws they chose from the thirteen states. The settlers would be allowed to elect an assembly, but the appointed governor had an absolute veto on all legislation. The governor could choose a council from men nominated by the assembly. Furthermore, the governor (and Congress) were to have full control over the militia and the appointment of militia officers. The entire plan was almost a parody of royal colonial government. After the population reached 60,000 it might vote a constitution and establish a state government. Land-company domination of the new government for the Northwest Territory was revealed in the first congressional appointments: General Arthur St. Clair as governor and General Samuel Holden Parsons as one of the judges.
One of the most important provisions of the Northwest Ordinance was the prohibition of slavery (and servitude) in the Northwest Territory. The clause was passed without southern opposition, apparently because the South had little hope of slavery being established north of the Ohio; furthermore, the clause was offset by the agreement that fugitive slaves in the West from other states might be apprehended and returned. A crucial difference, moreover, from Jefferson’s original plan of 1784, was that slavery was outlawed only in the Northwest rather than in the entire western public domain.
Other large land grants in the Ohio region rapidly followed. In 1788 John Cleves Symmes, a wealthy and influential politician from New Jersey, was sold 330,000 acres of Ohio land on the Miami River, west of the other grants and on the same bargain terms. Also, Connecticut, in return for surrendering its claims to western lands, was granted in 1786 a tract of 3.5 million acres bordering on the bottom of Lake Erie. The bulk of this area, known as Connecticut’s Western Reserve, was in turn sold to the Connecticut Company in the mid-1790s.
Despite the huge subsidies, the schemes of the Ohio and Scioto Companies quickly collapsed. The Ohio Company did little more than found Marietta, at the mouth of the Muskingum River; while the fly-by-night Scioto Company collapsed, succeeding only in the fiasco of swindling French settlers in founding the village of Gallipolis. The land was actually owned by the Ohio Company, so when the settlers arrived, they found their deeds to the land worthless. Symmes’ venture also fared none too well, although he succeeded in founding the town of Cincinnati. By 1790, there were several thousand American inhabitants of the Northwest Territory distributed between Cincinnati, Marietta, and Gallipolis. Governor St. Clair’s exercise of autocratic power soon led him into trouble with the American settlers and the Indians, who were understandably bitter at the invasion of lands that they claimed they never ceded to the white man.
The Indians, indeed, had cause for complaint. Congress earlier had arrogantly pronounced the western Indians subjects of the United States who had forfeited their rights by their hostility to the American cause during the Revolution. In particular, all Indian titles to their lands were declared void, and Indians were peremptorily ordered to move west of the Miami and Maumee Rivers—in short, to evacuate all their towns and hunting grounds in the Ohio country. To prevent American exercise of sovereignty over them, the Indians of the Northwest met at a general conference at Sandusky and at Niagara in the fall of 1783 and the summer of 1784, to plan confederation against American aggression.
An even greater obstacle to effectuating an American takeover of the Northwest was the British insistence on retaining the key Northwest forts of Oswego, Niagara, Detroit, and Michilimackinac.3 The British army, remaining there to protect the British fur trade from American and settler invasion, encouraged the Indians in joint resistance against the menacing prospect of an American invasion. To the anguished American outcry that the British occupation was in direct violation of the peace treaty, the British could promptly reply with a tu quoque: for after all, the Americans were completely violating the treaty clause pledging no legal obstacles to a collection of prewar debts owed to British subjects, and they were also making no effort to comply with the treaty’s restoration of confiscated Loyalist property. Despite its affirmation, Congress could not force the states to collect prewar British debts; indeed, attempts in various cities caused riots and threats of assassination against the would-be debt collectors. The Americans, in their turn, used as their excuse for violating the treaty a previous British violation: evacuating British troops had taken with them several thousand black slaves, some of whom were allowed their freedom, while others were sold again into slavery in the West Indies.4
The Continental Army had disbanded with the advent of peace, and the states would not stand for such a gross assumption of central power as a peacetime standing army. But Congress evaded this clear policy by creating a temporary western force, made up of militia from several states interested in grabbing the Northwest. This small contingent under the command of General Josiah Harmar of Pennsylvania was, however, scarcely in a position to attack the British and Indian forces in the Northwest. Indeed, their only action was to burn private settlements which had dared to venture north of the Ohio River in defiance of congressional will. During the remainder of the 1780s congressional policy toward the Indians could best be described as two-faced. Thus, the Northwest Ordinance piously pledged that “the utmost good faith shall always be observed toward the Indians; their lands and property shall never be taken from them without their consent …” Yet, Governor Arthur St. Clair was at the same instructed by Congress not to “neglect any opportunity … of extinguishing the Indian rights to the westward as far as the River Mississippi.”5
Before St. Clair’s appointment, a bizarre movement developed for a new state of Illinois, stimulated by Congress’ Ordinance of 1784. The war-created Illinois County of Virginia had collapsed late in the conflict. After the war, however, the adventurer John Dodge, former Indian agent for Virginia in Illinois, seized the military command of the village of Kaskaskia and proceeded without authorization of any kind to govern and terrorize its French citizenry. Dodge and Dorsey Pentecost, former head of the Virginia militia in the west, cooked up a petition for a new state of Illinois, but the petition had few supporters and the movement got nowhere.
Meanwhile, directly to the east of the Northwest Territory, the state of Pennsylvania was succeeding in expanding its territory at the expense of other states and the nascent new-state movements. In accordance with a bi-state agreement of 1779, the long-disputed Pennsylvania-Virginia boundary was finally settled in 1785, with Pennsylvania acquiring Pittsburgh and environs. Further east, a congressional court in 1782 arbitrarily awarded Pennsylvania jurisdiction over the Connecticut settlers of the Wyoming Valley, but on condition that the land titles of the settlers be upheld. Pennsylvania ignored this proviso and promptly sent militia to drive out the settlers, spurred on by the speculative land claims of leading Pennsylvania legislators. Connecticut’s Susquehanna Company, organizers of the settlement, defended its colonists, and civil war raged, the settler resistance being led by frontiersmen John Franklin, under the Company promise of land grants. Ethan Allen and his Green Mountain Boys went down to aid the Wyoming settlers. Franklin proposed the formation of a new state of Westmoreland, to include the Susquehanna Valley of New York as well as Wyoming Valley in Pennsylvania. Oliver Wolcott of Connecticut drafted a constitution for Westmoreland, but the state of Connecticut completely betrayed its colonists and left them to the mercies of Pennsylvania, in return for the retention of the Ohio Western Reserve in 1786. Pennsylvania’s jurisdiction was firmly resisted by the embattled settlers until Pennsylvania finally agreed to confirm the land titles of the pre-1782 settlers. John Franklin, however, was seized and tried by the Pennsylvania authorities.6
- 1. [Editor’s footnote] For more on the western lands, see Rothbard, Conceived in Liberty, vol. 4, pp. 1483–86, 1527–29; pp. 369–72, 413–15.
- 2. Jensen, The New Nation, p. 357.
- 3. British troops also remained in the northern New York forts of Oswegatchie, Pointe-aur-Fer, and Dutchman’s Point.
- 4. [Editor’s footnote] Southerners also argued that the debts were incurred during an unjust mercantilist regime. See Rothbard, Conceived in Liberty, vol. 3, pp. 1071–72; pp. 307–08.
- 5. William T. Hagan, American Indians (Chicago: University of Chicago Press, 1961), p. 42.
- 6. [Editor’s footnote] Jensen, The New Nation, pp. 169–70, 276–81, 327–39, 350–59; Burnett, The Continental Congress, pp. 682–88; Nettels, The Emergence of a National Economy, pp. 142–55; Thomas Perkins Abernethy, Western Lands and the American Revolution (New York: Russell and Russell, 1959), pp. 309–10; A.M. Sakolski, The Great American Land Bubble (New York: Harper & Brothers Publishers, 1932), pp. 99–123.
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