On July 13 the Northwest Ordinance became law, establishing a system of government for settlers in the wild territory west of the Ohio River. For years the Congress of the Confederation had wrestled with the question of how to govern new territories, but it remained indecisive until pressured to act by a representative of the Ohio Company of Associates, the Reverend Manasseh Cutler of Ipswich, Massachusetts.

Reverend Cutler was a tall, stout man of shrewd intellect and polished manners who earned his keep as the pastor of Ipswich’s Congregational church. Despite his calling, he felt no compunction about speculating in land and had joined the Ohio Company of Associates at its founding at Boston’s Bunch of Grapes Tavern on March 1, 1786. The company intended to buy from the government a vast plot of land for colonization in the Ohio wilderness with nothing more than a pile of depreciated Continental certificates from the Revolutionary War. Only after Reverend Cutler argued the company’s cause before Congress—and agreed to a profit-sharing scheme involving public officials—did the government agree to sell the land.

But the Ipswich clergyman knew that the Ohio Company’s colony would be far more likely to attract settlers and prosper if its citizens’ rights were guaranteed and a strong government kept order. At his urging Congress finally formed a workable plan of government for the region: the Northwest Ordinance.

The ordinance contained a bill of rights, outlawed slavery in the territory, altered inheritance laws to prevent the perpetuation of aristocratic estates, and described the territory’s system of government. That system set a precedent among the world’s colonial policies, for rather than repeat Britain’s error of exploiting its colonies, the United States decided to treat the new territory as an extension of the nation itself. Until the territory’s population reached sixty thousand, its leaders would be appointed by Congress, but after it reached that size it could write a state constitution and be admitted to the Union on equal terms with the original thirteen states.

By establishing these steps to statehood, the ordinance ensured that no radical departures in local government could arise. It also helped boost the cause of federalism by guaranteeing strong ties between states and the central government. So sound were its principles that the Northwest Ordinance remained in effect with few changes as the nation spread across the continent.