Land Ordinance of 1785 -- in tandem with the Northwest Ordinance of 1787 -- paved the way for land division and settlement in the Northwest Territory, and creation of the states of Ohio (1803), Indiana (1816), Illinois (1818), Michigan (1837), Wisconsin (1848) and part of Minnesota (1858). Both ordinances were adopted by the Confederation Congress.
An Ohio Historical Society web site explains: "In the Treaty of Paris (1783), which formally ended the American Revolution, England relinquished the Ohio Country to America. Despite this, the Confederation Congress faced numerous problems gaining control of the land. Native American tribes did not agree with America's claim that the land belonged to the whites. Numerous states, especially Connecticut and Virginia, also claimed the land. These states, when they were still colonies of England, had received permission from the king to control all land between their colonies on the East Coast and the Pacific Ocean.
"The Confederation Congress faced hard financial times at the American Revolution's conclusion. The Articles of Confederation did not allow the federal government to tax its citizens. The Confederation Congress hoped to sell the land in the Ohio Country to raise funds so that it could operate. The government also feared the large number of squatters in the Ohio Country. Some congressmen believed that these settlers might form their own country, since the Appalachian Mountains left them so isolated from the rest of the nation. The Confederation Congress immediately began to negotiate with the Indians and the states, so that the federal government could claim sole ownership of the land." The OHS web site continued: "While these negotiations were occurring, the Confederation Congress implemented the Ordinance of 1784. It called for the land north of the Ohio River and east of the Mississippi River to be divided into 10 separate states. The Ordinance of 1784 established that the western territories would become states, but it failed to establish how the government would distribute the land or how the territory would be settled. "The Land Ordinance of 1785 dealt with these issues. As the states and Indians relinquished lands, government surveyors were to divide the territory into individual townships. Each township was to be square. Each side of the square was to be six miles in length, and the completed square would include a total of 36 square miles of territory. The township would then be divided into one-square mile sections, with each section encompassing 640 acres. Each section received its own number. Section 16 was set aside for a public school. The federal government reserved sections 8, 11, 26, and 29 to provide veterans of the American Revolution with land bounties for their service during the war. The government would sell the remaining sections at public auction. The minimum bid was $640 per section or $1 for very acre of land in each section. "The first portion of Ohio surveyed became known as the Seven Ranges. The northern boundary was an east to west line beginning where Pennsylvania's western border intersected the Ohio River. Pennsylvania's western border also served as the first north to south line. The surveyors plotted a total of eight lines, each six miles apart, in this first survey. The end result was seven north to south rows open for settlement, thus the name the Seven Ranges. "Although the government had now opened up parts of the Ohio Country for purchase settlement, the Confederation Congress continued to face many of the same difficulties that existed prior to the Ordinance of 1784 and the Land Ordinance of 1785. Indians failed to relinquish much of the land, and squatters continued to flood the area, refusing to pay the required sums for the land." (See Northwest Ordinance, Northwest Territory, Miami Purchase, Virginia Military District and Congress Lands)