The land companies in the Northwest Territory from 1783 to 1800

Front matter

THE LAND COMPANIES IN THE NORTHWEST TERRITORY

BY

RUDOLPH HANS NOTTELMANN A. B. Monmouth College, 1912.

Contents

I. Development of Land Policies through 1787 1

II. Land Companies and Congress 11

III. The Ohio Company 22

CHAPTER I Development of Land Policies through 1787

The proper use and disposition of the public lands have been questions involving no little legislation as well as administrative difficulty from the beginning of our history. The attention of the Continental Congress was early called to the subject of the crown lands or vacant territory. On September 16, 1776, bounty lands were offered to those who would enlist in the war,^ and on August 27 of the same year liberal land offers were made to foreign

officers and others who would leave the enemy* s service to fight

o

in the continental line.

At this time, however, Congress did not own the lands which she was thus offering. All the vacant territory was covered by claims of the various states. Massachusetts claimed, under her old charter of 1629, all the land west of the settled portion of New York between a point three miles north of the source of the Merrimac and three south of the Charles River. Connecticut based her claims on her charter of 1662. By this she thought she had a clear title to all lands south of the Massachusetts line as far as the latitude of New York city. New York's claims were based on the Iroquois' cessions and embraced all the territory north of the Tennessee River. Virginia by her charter of 1609 and by the

^■Journal of Congress, ii., 336. 2Ibid., 310.

conquest of George Rogers Clark claimed nearly the same lands as New York. The Carolinas under the three charters of 1663, 1665, and 1732 claimed the land south of the Virginia territory and north of the Savannah River; while Georgia under her charter of 1732 and the proclamation of 1763, which gave her the land between the Altanaha and St. Marys rivers, claimed as far west as the Mississippi .

The other states which had no claims maintained that if these lands came into the possession of the government they should be used for the benefit of all the people of the United States and not for the advantage of the people of a few states. The larger states had hoped to pay off their soldiers from the sale of the lands but Congress refused to investigate their claims and suggest ed that all the lands which they claimed should be ceded to the United States to be used in the interest of the public good. An early proposal for cession was made by the committee of finance on September 19, 1778, and a year later Virginia and the other states were urged to cease granting lands during the continuance of the war. In 1780, New York offered to cede her western lands without reserve and between 1782 and 1802 the seven claimant states made cessions. Out of the grants of these states was constituted the famous Northwest Territory.

As early as October 10, 1780 Congress made her first statement in regard to her policy concerning the western lands when she resolved that they should be held as common property of all the states, be formed into states and be granted or settled at such times and under such regulations as should be agreed upon by the United States in Congress assembled. From this statement gradually developed the policy regarding the western lands.

Little interest was taken in the disposition of western lands until the prospect of peace in 1783, when the question of the payment of the soldiers brought forward several plans. In April 1783 the army plan was originated by some of the principal officers in the continental army, foremost among whom was Pickering.1 Entitled "Proposition for settling a state by such officers of the federal army as shall associate for that purpose," it proposed to purchase from the natives the tract of country bounded by Pennsylvania on the east, the river Ohio on the south, a meridian line drawn thirty miles west of the mouth of the Scioto River on the west, and by Lake Erie on the north. The promises made to the soldiers for grants of land for military service were to be fulfilled. The surplus lands were to be formed into common property of the state to be used for the common good in the building of roads, schools, and defraying the expenses of the government. The United States was to bear the expense of marching to the land as well as to furnish subsistence for three years. The prospective state was to gain admittance into the Union and slavery was to be excluded. This was the first suggestion for forming a new state in the Northwest Territory. By this scheme, the state would be formed of military men and the dues of the army from the government would be secured. It was planned to submit it first to the army, after which it would be sent to Congress. However, since Congress'

"^"Pickering was a colonel in the army. Manasseh Cutler, Life, Journals and Correspondence, i., 156 ff.

policy was to obtain the territory before venturing to organize it, the promoters probably saw that it would be useless to urge the matter at this time.

While this proposal was being discussed, another known as the financiers' plan was brought forward. This was introduced by Theodoric Bland of Virginia and was supported by Hamilton. It provided for the acceptance of Virginia's cessions without granting her the territory which she had reserved north of the Ohio River. The lands were to be used to pay the army, thirty acres being allowed for every dollar due. The lands were to be free from taxes for seven years. The territory was to be laid off into districts two degrees of latitude and three of longitude each, and each district into townships. The surveying was to be done at the expense of the general government. Provision was also made that as soon as the district contained twenty thousand male inhabitants, it should be admitted into the Union on equality with the original states. Ten thousand out of every one hundred thousand acres were to be reserved as a domain for the use of the United States, the revenue from which was to be used to pay the civil list, erect forts, and found seminaries of learning.

In the same year, 1783, on June 16, a petition signed by two hundred and eighty-five officers of the army was sent to Washington

"^Bancroft, History of the Formation of the Constitution of the United States, i., 312-14.

This reserved section lay between the Miami and Scioto rivers and was known as the Virginia military district since it was reserved to satisfy the bounties promised by Virginia to her soldiers who had served during the Revolution.

With it was a letter from Rufus Putnam,^- one of the prime movers in the scheme. In this he told of the land desired and wished "that no grants will be made but by townships six miles square, or six by twelve, or six by eighteen miles, to be subdivided by the proprietors to six miles square, that being the standard on which they wish all the calculations to be made." The petition cited the resolve of Congress concerning land grants and stated that the petitioners were informed that the territory which now corresponds to the state of Ohio was a tract of land "not claimed by or in the jurisdiction of any particular state in the Union." "The land," the petition continued, "is of such quality and the situation such as may induce Congress to assign and mark it out as a tract or territory suitable to form a distinct government (or colony of the United States) in time to be admitted one of the Confederate States of America." They asked that Congress make provision for the

location and survey of the lands to which they were entitled within

p

the aforesaid district.

Washington, who sent the petition on to Congress, the next day, inclosed with it a letter recommending the granting of such lands, maintaining that a settlement fromed by such men would give security to the frontier.3 The application to Congress was at an

■^Born in Massachusetts in 1738; served in French wars, after which he studied civil engineering, becoming proficient in this line; served in the Revolution; and later became interested in the Ohio Company, being one of the pioneer settlers of Marietta. Manasseh Cutler, Life, Journals and Correspondence, i., 178.

2The petition is printed in ibid., 159 ff. 3

Washington was very much interested in the settlement of the western lands. For his letter, see ibid., 167.

unfavorable time, for it was at this period that the mutiny of the Pennsylvania soldiers occurred. Washington writing to Putnam on June 2, 1784 regretted the fact that the petition had not been acted upon and expressed the hope that the new Congress which woulc soon assemble would take action upon it.l Congress, however, did not make any grants.

After Virginia had made her cession in 1784 a committee was appointed to draw up a form of government for the western territory . The first report of this committee was presented March 1, 1784 and was recommitted March 17. The second report was assigned for consideration for March 24 but did not come up until April 19. It was passed April 23, and became the law for the western territory.2

It provided that the territory should forever remain a part of the United States, subject to the government of Congress and the articles of confederation. The form of government was to be republican. In the first report provision had been made that there be no slavery in any of the states after the year 1800. This clause however was struck out and the bill as finally passed on the 23d made no provision concerning slavery. It was also provided that when any of the states should have as many free male inhabitants as any of the least numerous of the original states, it should be admitted by its delegates into the Congress of the United States. No provision was made for the selling of ungranted lands.

The throwing out of the clause concerning slavery caused no little displeasure and efforts were made to restore it. The

Journals of Congress, ix., 108 ff.

It was especially agitated by Rufus King.

report submitted by the committee for that purpose was not considered as the land ordinance of 1785 was occupying the attention of Congress

In the formation of this ordinance which provided for a method of land disposal, the committee was naturally influenced by the systems employed by the states. Two land systems had developed during the colonial period, the New England and the southern. The basis of the former was the township system. Private ownership was predeced by the laying out of townships by the colony. There could be no title to land outside of a township, within which the land was divided by the colony or the proprietors into tracts which were carefully laid out and the bounds recorded. The surveys in nearly all instances preceded settlement. Two other important features were the grants of land for education and religion and the sale of land by auction.2 Under the southern system land was taken up by the location of warrants on any part of the unappropriated area. The surveys were supposed to be made by public surveyors but as most of them were made by deputies who had had little experience the possibility of error was always present. A person could select a desirable tract of unappropriated land and have it laid off by a surveyor under his direction without consid ering the relation of other pieces of property to his own. The

''"Grayson to Madison, 1785: "Mr. King of Massachusetts has a resolution ready drawn, which he reserves till the ordinance is passed for preventing slavery in the new states. I expect seven states may be found liberal enough to support it." Bancroft, History of the Formation of the Constitution of the United States, i., 435.

Treat, National Land System, 35 ff.

These were the usual methods of proceedure.

differences between the two systems are quite evident. The southern scheme with its priority or tomahawk claim provision would lead to endless disputes over land titles, while on the other hand, the New England system would give security of title. While the southern system encouraged initiative and resourcefulness, the New England system afforded better protection against the Indians since it provided for more compact settlements.

The land ordinance passed May 20 embodied most of the provisions of the New England system. The ordinance provided that the territory ceded by the states was to be disposed of as soon as the purchase of Indian titles had been made. Surveyors were to divide the territory into townships six miles square by lines running due north and south and others crossing these at right angles as near as they may be. The first lines running north and south and east and west were to begin on the Ohio River on the Pennsylvania border. As soon as seven ranges were surveyed, townships were to be drawn by lot, one seventh part of the entire seven ranges for the use of the continental army. The remainder was to be distributed among the states who, after notice in a newspaper or proclamation posted in a public place, were to sell them at public auction. The townships were to be sold alternately as a whole and by lots. None of the lands was to be sold under one dollar per acre "to be paid in specie, or loan office certificates, reduced to specie value, by the scale of depreciation, or certificates of liquidated debts of the United States including interest, besides the expense of the survey and other charges thereon, which are hereby rated at thirty-six dollars the township (in specie or certificates as afore said) and so in the same proportion for a fractional part of a

township or of a lot, to be paid at the time of sale; on failure

of which payment, the said lands shall again be offered for sale."

Provision was also made for the reservation for the United States

of sections eight, eleven, twenty-six, and twenty-nine out of every

township. Lot sixteen of every township was reserved for the

maintenance of public schools.^"

The subject of the government of the western territory did not

come up again until the next year. Monroe, in 1785, had visited

the Ohio lands and had become convinced that the formation of many states would not be advantageous. He recommended that the western lands be divided into not less than two nor more than five states. Grayson at the same time urged for fewer states, his idea being not less than five. On September 19, 1786 a committee appointed to consider and report the form of government for the

western territory made a report which was taken up for consideration on the 29th. The first report not being acted upon, another

was submitted on April 26, 1787. On May 9, it was read the second time, amended and ordered to a third reading on the next day.

It did not, however, come up again until July 9 and after several

^"Journals of Congress, x., 119 ff. o

The ordinance of 1784 had provided for ten states.

William Grayson was a native of Virginia and a member of the Continental Congress. From 1789-1820, he was a senator of the United States.

Journals of Congress, xi., 166.

Ibid., xii., 49.

readings was passed on the 13th, 1787.

This law, known as the Ordinance of 1787, provided that the territory be one district subject to division. A governor and a court of three judges were to be .appointed by Congress to serve for three years. When the district had acquired five thousand male inhabitants it was to be allowed to send a representative to the assembly. No one was to be bothered on account of religious belief and religion and morality were to be encouraged. The terri tory was to remain a part of the United States and the states formed out of it were to number not less than three nor more than five. When a state had sixty thousand inhabitants it was to be admitted to the Union. Neither slavery nor involuntary servitude were to be permitted in the territory.

Thus developed the land system under which, modified in part, disposal of the western lands was made.

Journals of Congress, xii., 58 ff.

CHAPTER II Land Companies and Congress

After the land ordinance of 1785 had been passed, various attempts were made to amend or change it. Congress asked the board of treasury to report a plan of sale and acting on its report of April 21, 1787 did away with the sales in the states and provided that the lands be sold where Congress should sit and that none should be sold for less than one dollar per acre. It was also provided that one- third of the purchase money be paid in the public securities of the United States and the remaining two-thirds in the same manner three months after the date of sale. Failure to meet this requirement meant the forfeiture of the first payment.^"

Under this regulation, in the fall of 1787, about 108,431 acres were sold at auction in New York for $176,000. Actually, however, only 72,974 acres were sold for the rest was forfeited on account of failure to pay. Several attempts were made to have

Congress make good the loss incurred from these purchases, but no

o

money was refunded.

^"Journals of Congress, xii., 389. o

In 1823 an application was submitted by Alexander Macomb stating that he and a party by the name of Edgar had in pursuance of the above resolutions purchased 35,447 acres at a coffee house in New York, between September 21 and October 9, 1787. They asked that the money they had lost by failure to make their second payment be given to them. This application was refused.

u

Before the Ordinance of 1787 had been drawn up and Congress was considering plans for the western lands, the Ohio Company of Associates petitioned for territory. This company which was an outgrowth of the "officers1 petition" resolved on March 8, 1787 that three directors should be appointed for the company, whose duty it should be to make application to Congress for a private purchase of lands under such descriptions as they should deem adequate to the company. General Samuel Parsons, Rufus Putnam, and Reverend Manasseh Cutler were chosen as the directors , Parsons being selected to make the application to Congress.**"

Cutler, writing to Major Sargent on March 16, stated that he approved of the plan to make application and that it was of the greatest importance to the company that the purchase be made as soon as possible. He a lso maintained that if Congress should prefer surveying the lands at their own expense he would not be willing to offer more than half a dollar per acre.2 In a letter to Nathan Dane on the same date, he. expressed the hope that Congress notwithstanding their land ordinance would not refuse to make a private sale to the company.

Parsons' application to Congress was not pleasing to the com- 3

pany. In a letter of May 30, 1787 from Putnam and Cutler to Sargent, they declared that they could not agree to the location proposed by parsons. They maintained the most advantageous situation would be to have the eastern bounds on the line of the seventh

■^-Manasseh Cutler, Life, Journals and Correspondence, i., 191. 2Ibid., 192, 193.

Parsons made his application on May 9, 1787.

range of townships and the western on the line Congress had fixed

as the western boundary of the state of Washington, then to extend

northwardly so as to include the quantity of lands the company

wished to buy?" They insisted that the eastern boundary be the

Muskingum; otherwise, they would think of giving up the idea of

making a purchase.

The company resolved that one of their number visit Parsons

and, if sufficient representation for continuing the business with

Congress was found, to go on to that body. Cutler who had been

one of the foremost movers of the company was chosen to take up

the work in which Parsons had failed. On June 23, 1787 he prepared

for his journey from Ipswich, his home town, to New York where

Congress was then sitting. With the entrance of Cutler, affairs took a different trend for he proved to be a most capable man. On July 2, he visited with Parsons and settled all matters with respect to his business with Congress, as well as receiving a large number of introductory letters to the members of that body. On the 6th he delivered his petition and proposed terms and conditions

of purchase. A committee was appointed to agree on the terms of negotiation.

During the next few days while waiting the acting of Congress Cutler consulted with Hutchins , the United States geographer, as

"^Manasseh Cutler, Life, Journals and Correspondence, i., 196. In this same letter Cutler expressed the opinion that Parsons may have had views distinct from the interests of the company in his proposals for a location.

to the best place to locate and was advised to choose the Muskingum. On the 9th, Cutler attended the committee and debated on the terms, but they were, as Cutler said, "so wide apart that there appears little chance of closing a contract ." ^ Congress now being busy with the ordinance of 1787, Cutler was obliged to suspend his negotiations.2 On the 18th he again renewed his relations with Congress and found that there were a number opposed to his terms, but yet others were very favorable to him. On the 20th, the secretary of Congress gave Cutler an ordinance that had been drawn up the previous day. This, however, was not satisfactory to him and he told Congress that he preferred purchasing lands of some of the states. He also proposed to leave the city immediately but Congress insisted on his staying until another attempt had been made.

At this point, Colonel Duer came to him "with proposals from a number of the principal characters in the city to extend our contract and take in another company, but that it should be kept a profound secret. He explained the plan and offered me generous conditions if I would accomplish the business for them."3 The plan was agreeable to Cutler who agreed with Duer to purchase more lands if terms for another company could be obtained.

On the day following this agreement several members of Congress called on Cutler and informed him if he renewed his request

In his journal for July 10 , Cutler says that a copy of the ordinance was sent him with leave to make remarks, which he did. Cutler seems to have had considerable influence on the development of the ordinance of 1787.

to Congress they thought he might be able to obtain conditions as he desired. Cutler still maintained an indifferent attitude and talked of the advantage of a contract with some of the states. ^- At length, however, he told Congress that if they would agree to the terms he proposed, he would extend his purchase to the tenth township from the Ohio and Scioto inclusively. By this, he said Congress could pay $4,000,000 of the national debt.

After a warm debate, another ordinance was passed on the 23d by which the board of treasury was <x uthorized and empowered to contract with "any person or persons for a grant of land which shall be bounded by the Ohio, from the mouth of the Scioto to the intersection of the western boundary of the seventh range of townships now surveying, thence by the said boundary to the northern boundary of the tenth township from the Ohio, thence by a due west line to the Scioto, thence by the Scioto to the beginning." The territory was to be surveyed by officers of the United States and seven years from the completion of this work the purchasers at their own expense were to lay off the whole tract according to the land ordinance of 1785. Lot sixteen in each township was to be given for the maintenance of public schools; lot twenty-nine for the purpose of religion; and numbers eight, eleven, and twenty-six for the further disposition of Congress. Not more than two townships were to be given for a university. The price was to be not less than one dollar per acre liable to reduction for bad lands

^"Cutler hoped to bring Congress to terms by pretending to be very favorably inclined to entering into negotiations with some of the states.

o and other incidentals providing it did not exceed one-third of a dollar per acre. Rights for bounties to the army were allowed to be used in payment provided they should not exceed one-seventh of the land to be paid for. Not less than $500,000 of the purchase money was to be paid upon the closing of the contract and the rest when the survey was completed.

On the day following, Cutler received a letter from the board of treasury containing these resolutions, asking him if he wished to close a contract of these conditions. After consulting with Duer and Sargent, it was agreed that they could not accept the terms without some variations. They therefore, on July 26, 1787, sent a letter to the board stating the terms on which they would contract.1 They insisted that $200,000 be paid with the contract, $500,000 with the survey, and the remainder in six equal payments. They agreed to regulate the contract so that they would never be entitled to deed, entry, or occupancy except on the lands actually paid for. On such terms they expressed their willingness to contract .

St. Clair, on the 26th, assured Cutler he would make every

possible exertion toget Congress to accept the terms as stated in o

his letter. In his journal of the 26th Cutler says that Sargent, Duer and he "now entered into the true spirit of negotiations with great bodies. Every machine in the city that it was possible to set to work was now put in motion."3 At this time it was agreed

Ibid. It is evident a great deal of wire pulling was employed.

that should they fail, Sargent should go to Maryland while Cutler went to Connecticut and Rhode Island to try to get representations favorable to the plan.*

On the 27th Cutler decided to leave New York and paid his respects to the members of Congress, informing them of his intentions. He told them he would await the decision of Congress, but if his terms were not granted he would turn his attention to some other part of the country.2 At half pat three he was informed that an ordinance had passed Congress agreeable to his terms. Cutler and Sargent immediately went to the board of treasury.

By this ordinance, says Cutler, "we obtained the grant of near five millions of acres of land amounting to three million and a half of dollars; one million and a half of acres for the Ohio Company and the remainder for a private speculation in which many of the principal characters in America are concerned. Without connect ing this speculation similar terms and advantages could not have been obtained for the Ohio Company."0 The private speculation spoken of by Cutler was the Scioto Company.

On October 27, Cutler completed the contract with the board of treasury when he and Sargent signed two contracts, one for the Ohio and the other for the Scioto Company. Cutler speaks of it as the "greatest private contract ever made in America."

Encouraged by the success of the Ohio Company, John Cleve

*Only eight states were represented at this time and seven of these were necessary to pass the bill.

New York, Massachusetts, and Connecticut were selling lands at fifty cents per acre.

Symmes, congressman from New Jersey, who had visited the Miami country in the summer of 1787, when he became interested in its prospects, organized a company and petitioned Congress for a tract of land between the Great and Little Miamis.1 In his petition he stated that he was induced by citizens of the United States west of Connecticut to make petition for lands on the same conditions as those granted to Sargent and Cutler. The boundaries of the tract desired were to "begin at the mouth of the Great Miami River, thence running up the Ohio to the mouth of the Little Miami, to a place where a due west line to be continued from the western termination of the northern boundary line of the grant to Messrs. Sargent, Cutler, and Co. shall intersect the said Little Miami, thence due west continuing the said western line to the place where the said line shall intersect the main branch or stream of the Great Miami River, thence down the Great Miami to the place of beginning' At the time the application was referred to the board of

treasury, Symmes paid into the treasury $82,198, the principal par"

p

of which had been advanced by his associates. His proposition being accepted and the first payment having been made, Symmes did not wait to close his contract but immediately set out for the western territory with the intention of exploring his purchase. When Congress heard this they became alarmed, thinking Symmes meant to gain possession of his lands and then defy them. A motioi was made to send General Harmar to dispossess him. However, Dr.

American State Papers, Public Lands, i., 95.

Bondinot and General Dayton, two of Symmes' associates, were in Congress at the time and they succeded in making sufficient explanation to induce Congress to refrain from this action. Daniel Marsh, another of the associates, was sent after Symmes to get him to return or else to secure from him a power of attorney authorizing some of his friends to complete the contract. Symmes was overtaken at Pittsburgh where he gave Marsh a letter of attorney authorizing Jonathan Dayton and Daniel Marsh to execute the contract as they should see fit.