<P> The Northwest Ordinance (formally An Ordinance for the Government of the Territory of the United States, North - West of the River Ohio, and also known as The Ordinance of 1787) was an act of the Congress of the Confederation of the United States (the Confederation Congress), passed July 13, 1787 . The ordinance created the Northwest Territory, the first organized territory of the United States, from lands beyond the Appalachian Mountains, between British North America and the Great Lakes to the north and the Ohio River to the south . The upper Mississippi River formed the Territory's western boundary . It was the response to multiple pressures: the westward expansion of American settlers, tense diplomatic relations with Great Britain and Spain, violent confrontations with Native Americans, the weaknesses of the Articles of Confederation, and the empty treasury of the American government . It was based upon, but more conservative than Thomas Jefferson's proposed ordinance of 1784 . The 1787 law relied on a strong central government, which was assured under the new Constitution that took effect in 1789 . In August 1789, it was replaced by the Northwest Ordinance of 1789, in which the new Congress reaffirmed the Ordinance with slight modifications . </P> <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 Articles of Confederation . 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, 51 U.S. 82, 96, 97 (1851), 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>

The northwest ordinance of 1787 created the process by which