<P> When passed in New York in 1787, the Northwest Ordinance showed the influence of Jefferson . It called for dividing the territory into gridded townships, so that once the lands were surveyed, they could be sold to individuals and speculative land companies . This would provide both a new source of federal government revenue and an orderly pattern for future settlement . </P> <P> The Northwest Ordinance of 1787 established the concept of fee simple ownership, by which ownership was in perpetuity with unlimited power to sell or give it away . This was called the "first guarantee of freedom of contract in the United States". </P> <P> Passage of the ordinance, which ceded all unsettled lands to the federal government and established the public domain, followed the relinquishing of all such claims over the territory by the states . These territories were to be administered directly by Congress, with the intent of their eventual admission as newly created states . The legislation was revolutionary in that it established the precedent for new lands to be administered by the central government, albeit temporarily, rather than under the jurisdiction of the individually sovereign original states, as it was with the Articles of Confederation . The legislation also broke colonial precedent by defining future use of the natural navigation, transportation and communication routes; it did so in a way that anticipated future acquisitions beyond the Northwest Territories, and established federal policy . Article 4 states: "The navigable waters leading into the Mississippi and St. Lawrence, and the carrying places between the same, shall be common highways and forever free, as well to the inhabitants of the said territory as to the citizens of the United States, and those of any other States that may be admitted into the confederacy, without any tax, impost, or duty therefor ." </P> <P> The most significant intended purpose of this legislation was its mandate for the creation of new states from the region . It provided that at least three but not more than five states would be established in the territory, and that once such a state achieved a population of 60,000 it would be admitted into representation in the Continental Congress on an equal footing with the original thirteen states . The first state created from the Northwest Territory was Ohio, in 1803, at which time the remainder was renamed Indiana Territory . The other four states were Indiana, Illinois, Michigan, and Wisconsin . A portion (about a third) of what later became the state of Minnesota was also part of the territory . </P>

The northwest ordinance of 1787 prohibited slavery in the old northwest