Ohio Company of Associates - Negotiations With The Government

Negotiations With The Government

Cutler was sent to New York to negotiate with the Congress of the Confederation to help the company secure a claim on a portion of the land. While there, Cutler aligned himself with William Duer, secretary of the U.S. Treasury Board. Duer and his associates formed a group of New York speculators who were determined to see settlement of the area west of the Appalachians. At this time, Congress desperately needed revenue. The prospect of sales of land helped settle controversy and secure the incorporation in the Northwest Ordinance of the paragraphs that prohibited slavery, provided for land for public education and for the support of the ministry.

After the creation of the Northwest Territory, Cutler suggested that the governor of the territory be General Arthur St. Clair, who was then serving as the President of Congress. Once the President had appointed St. Clair to his new position, Cutler and Major Winthrop Sargent, the secretary of the Ohio Company, signed two new contracts with him on October 27, 1787. The first was for the Ohio Company to purchase 1,500,000 acres (6,000 km²) of land at the confluence of the Ohio and Muskingum rivers, from a point near the site of present-day Marietta, to a point nearly opposite present-day Huntington, West Virginia, for a payment of $1 million in government securities, then worth about 12¢ specie to the dollar. The contract also provided that one section of land in every township be devoted to the maintenance of public schools, another section be set apart for religious uses, and two entire townships be reserved for a university.

The second contract was an option to buy all the land between the Ohio and the Scioto rivers and the western boundary line of the Ohio Company's tract, extending north of the tenth survey township from the Ohio, this tract being preempted by Manasseh Cutler and Winthrop Sargent for themselves and others for the Scioto Company. Cutler's original intent was to buy only about 1,500,000 acres (6,000 km²) for the Ohio Company, but on the July 27, Congress authorized a grant of about 5,000,000 acres (20,000 km²) of land for $3,500,000; a reduction of one-third was allowed for bad tracts, and it was also provided that the lands could be paid for in United States securities. On the same day, Cutler and Sargent for themselves and associates transferred to William Duer, then Secretary of the Treasury Board, and his associates one equal moiety of the Scioto tract of land mentioned in the second contract. Both parties were to be equally interested in the sale of the land, and were to share equally any profit or loss. But, the Scioto Company interest was speculative, and their contract lapsed before they purchased any land. In contrast, the Ohio Company had a genuine plan of settlement.

The company made its first installment of $500,000, but was unable to raise the second $500,000. It settled for a purchase of 750,000 acres (3,000 km2), plus the two townships for College Lands and the reserved School Lands and Ministerial Lands sections in each township, for a total area of 913,833 acres (3,698.15 km2), called the First Purchase. The lands were privately surveyed, but on the same plan of townships, ranges, and sections as the adjacent Seven Ranges under the procedure of the Land Ordinance of 1785.