How land was distributed in the United States shifted dramatically in the 1790s. Although most histories of the federal lands fixate on the Land Ordinance of 1785, which created the rectangular grid, the neglected subsequent decade and a half witnessed an equally significant transformation, as the federal government altered from corporate to governmental distribution of the public lands.
Initially, the federal government anticipated using land companies, modeled on prerevolutionary efforts, to distribute the public domain. In its waning days, the Continental Congress sold millions of acres in the Northwest Territory to three such companies: the Ohio, Scioto, and Miami Companies. These companies would bear the risk and cost of settlement, while the federal government would achieve its policy goals of securing revenue and establishing a clear, systematic method to distribute land. But in practice, the companies succumbed the era’s rampant speculation on bare promises of ownership; their gambles using implicit congressional endorsement forced the federal government to compensate disgruntled purchasers. In place of corporate land distribution, the federal government shifted toward direct sales through federal land offices. This bureaucratic system ultimately governed much of the distribution of federal land over the following century.
This transformation from corporate to federal land sales has important historiographical implications. It underscores recent scholarship emphasizing the strength of early national federal government; it demonstrates shifting ideas about the nature and source of ownership in the early United States; and it stresses changing understandings of corporate and governmental power in the early republic, as older models that saw corporate authority as bolstering the state waned.