Seven of the states in the Confederation had at one time or another put forth claims, often overlapping, to lands west of the Appalachians. Not surprisingly, the so-called "landless" states resented the potential benefit that might be enjoyed by the "landed" states. In 1780, anticipating that the states with land claims would eventually cede them to the national government, Congress passed a resolution defining its policies towards these new lands. Beginning in 1781, claims to western lands began to be surrendered to the central government amidst great argument and bitterness. It was Virginia's willingness to abandon its claims north of the Ohio River that finally induced Maryland to ratify the "Article of Confederation" in March, 1781.
Following the conclusion of peace with Britain in 1783, the Congress called upon the considerable talents of Thomas Jefferson to bring order to the muddled western lands picture. His proposal, which would eventually become the Ordinance of 1784, advanced the following ideas:
The western areas must remain part of the United States and be subject to its central government. The ordinance stated specifically, "First, that they shall forever remain a part of this confederacy of the United States of America."
Newly developed areas in the West must shoulder a proportionate share of the national debt recently incurred in the War of Independence
Slavery must be prohibited in these areas after 1800
A procedure was set to detail the steps by which western areas would achieve statehood; the scholarly Jefferson proposed the names of Cherronesus, Assenisippia, Metropotamia, Sylvania, and Pelisipia, among others.
Congress adopted the heart of Jefferson’s proposal, but deleted the section on slavery and, fortunately, discarded the proposed state names. The ordinance’s value was found in its orderly approach to the thorny issue of bringing new areas into the union.
Indian leaders realized that white settlers would soon be on the move and were motivated to sign the second Treaty of Fort Stanwix (1784).
A systematic means to survey and prepare western lands for sale was presented in the Ordinance of 1785. The Great Northwest Ordinance (1787) revised the 1784 law's plan for admitting new areas to the Confederation.