During the mid-1780's, the formation of the new government of the United States experienced a difficult time. Americans were just beginning to see the weakness of the Articles of Confederation. There was talk of amending it, but the politicians quickly realized what an arduous task it would be. Before long individual states began quarreling over boundaries, commerce, and whose currency should be used. Then suddenly a rebellion flared in Massachusetts. There depressed farmers demanded laws against foreclosures and weak currency. They were led by Daniel Shay. Shay formed an army of 1,200 men and his army marched on Springfield in 1786. This period in time is known as Shay's Rebellion. It would take a year before Shay was defeated by a militia led by General Benjamin Lincoln. Unfortunately, under the Articles of Confederation the federal government could do nothing to help Massachusetts. This is in spite of the fact that Henry Cox, the Secretary of War authorized a 1,000 soldier army.
Then, on top of the problems of a weak central government things got worse. The economy entered into a recession that lasted for years and the paper currency that was being used was steadily declining in value. At the same time, wages and trade declined.
In the middle of all of this, Congress would however experience the passage of one successful bill entitled the Northwest Ordinance. The Northwest Ordinance was essentially a blueprint for the development of the territory northwest of the Ohio River. The United States had acquired the Ohio Valley under the Treaty of Paris in 1783. At this time, the local Native Americans rejected the United States authority over what they perceived as their lands. They desperately wanted to maintain their lifestyle. Then almost simultaneously there was a rush of 100's of settlers onto sacred Native American hunting grounds north of the Ohio River. The Northwest Ordinance addressed many of these problems when it was enacted by Congress until July 13, 1787. It laid out the procedure for federal administration of the Northwest Territory. It also laid out a procedure for the admission of new states.
This ordinance was unusual because it provided for justice and humanity for the Native Americans by slowing and the movement of Anglo settlers into the territory, while providing political order. Under the Northwest Ordinance the United States president was given the power to select a territorial governor. It was then the territorial governors responsibility to select or appoint all of the additional officials. The ordinance also mapped out the steps that each territory would have to go through to become a state.
A second stage of government would commence when their territory achieved a population of 5,000 males. At this time, qualified voters were allowed to elect the lower house of the territorial assembly. The territorial governor had the final say in all decisions. When, the territory achieved a population of 60,000 they became eligible for statehood. At this time they would receive all of the same rights of the previously existing states. Under the terms of the ordinance five states were soon established. They were Ohio, Michigan, Illinois, Wisconsin, and Indiana. Article VI of the Northwest Ordinance was the most controversial because it stated that slavery and voluntary servitude would not be permitted in the new territories, However, efforts to legalize slavery continued for decades to come.