Passed
by the Congress of the Confederation on May 20, 1785,
this is considered one of the most important legislative
acts in American history. 
The Ordinance of 1785 established a method for
the survey and sale of Western lands by the federal
government.
In 1780, the original 13 states began to cede their claims to land between the Appalachian Mountains and the Mississippi River. At the same time, a debate developed over how to dispose of those lands once they were acquired by the federal government. Some people believed that the lands should be surveyed into uniform units before sale, while others thought that individual speculators should be able to make their claims as they saw fit. The Ordinance of 1785 was a compromise solution.
The ordinance decreed that the federal government would survey the lands into individual townships, each of which was to be six miles square. These townships would then be subdivided into 36 lots of 640 acres (one square mile) each. These lots could then be further subdivided into rectangular units. Once this had been completed, the townships were to be sold at public auction for not less than $1 an acre. The ordinance also contained a provision setting aside one lot in each township to provide funds to maintain public schools.
As the United States acquired further territory -- as in the case of the Louisiana Purchase in 1803 -- the ordinance was applied to these new lands, until eventually its jurisdiction stretched to the Pacific Ocean.
The first federal survey of Western lands was conducted in 1781 in eastern Ohio by Thomas Hutchinson. That survey produced the map shown on this page.