<P> Considered one of the most important legislative acts of the Confederation Congress, it established the precedent by which the Federal government would be sovereign and expand westward with the admission of new states, rather than with the expansion of existing states and their established sovereignty under the Confederation government . It also set legislative precedent with regard to American public domain lands . The U.S. Supreme Court recognized the authority of the Northwest Ordinance of 1789 within the applicable Northwest Territory as constitutional in Strader v. Graham, but did not extend the Ordinance to cover the respective states once they were admitted to the Union . </P> <P> The prohibition of slavery in the territory had the practical effect of establishing the Ohio River as the boundary between free and slave territory in the region between the Appalachian Mountains and the Mississippi River . This division helped set the stage for national competition over admitting free and slave states, the basis of a critical question in American politics in the 19th century until the Civil War . </P> <P> The territory was acquired by Great Britain from France following victory in the Seven Years' War and the 1763 Treaty of Paris . Great Britain took over the Ohio Country, as its eastern portion was known, but a few months later closed it to new European settlement by the Royal Proclamation of 1763 . The Crown tried to restrict settlement of the thirteen colonies between the Appalachians and the Atlantic, which raised colonial tensions among those who wanted to move west . With the colonials' victory in the American Revolutionary War and signing of the 1783 Treaty of Paris, the United States claimed the territory, as well as the areas south of the Ohio . The territories were subject to overlapping and conflicting claims of the states of Massachusetts, Connecticut, New York, and Virginia dating from their colonial past . The British were active in some of the border area until after the Louisiana Purchase and the War of 1812 . </P> <P> The region had long been desired for expansion by colonists . The states were encouraged to settle their claims by the US government's de facto opening of the area to settlement following the defeat of Great Britain . In 1784, Thomas Jefferson, a delegate from Virginia, proposed that the states should relinquish their particular claims to all the territory west of the Appalachians, and the area should be divided into new states of the Union . Jefferson's proposal to create a federal domain through state cessions of western lands was derived from earlier proposals dating back to 1776 and debates about the Articles of Confederation . Jefferson proposed creating ten roughly rectangular states from the territory, and suggested names for the new states: Cherronesus, Sylvania, Assenisipia, Illinoia, Metropotamia, Polypotamia, Pelisipia, Washington, Michigania and Saratoga . The Congress of the Confederation modified the proposal, passing it as the Land Ordinance of 1784 . This ordinance established the example that would become the basis for the Northwest Ordinance three years later . </P>

Who was given land in the northwest territory as payment