By the peace treaty of 1783, the land that had been reserved for Native Americans became United States territory. The states to the east renewed their efforts to colonize it, claiming that swaths of that territory had been granted to them in their old royal charters. Typically these charters were vague about western boundaries or awarded the grantees all lands “from sea to sea.” Georgia claimed all of Mississippi north of latitude 31° north, and the influx of settlers from Georgia increased.
The United States and Spain disagreed about the northern boundary of West Florida. The United States maintained, on the basis of language in the peace treaty of 1783, that the boundary line was latitude 31° north.
Spain insisted that it was the northern line set in 1767 by the British, and refused to remove its soldiers from Natchez, which was in the disputed area. The dispute, complicated by Georgia’s claim to land in Mississippi, brought forth a welter of schemes and plots. Finally, in 1795, under the terms of the Treaty of San Lorenzo, Spain accepted latitude 31° north as the northern boundary of West Florida.
Three years later, in 1798, Spain withdrew its forces from the area north of the boundary. The Congress of the United States then created the Mississippi Territory on April 7, 1798. The new territory was bounded on the north by a line drawn east from the mouth of the Yazoo River, on the south by latitude 31° north, on the west by the Mississippi River, and on the east by the Chattahoochee River, which now forms part of the eastern border of Alabama.
A former Georgia governor, George Matthews, was appointed the territorial governor. Natchez was designated the first territorial capital. In 1802 the capital was moved to nearby Washington.
Matthews, however, never served as Mississippi governor because his land speculation activities evoked so much local opposition that he was almost immediately replaced by Winthrop Sargent. Matthews was the local agent of one of the four land companies that were granted vast tracts of land by the Georgia legislature in the Yazoo Fraud of 1795. The grant to Matthews’s company covered most of the Natchez district and, if validated, would have dispossessed all previous grantees. Most of the legislators held shares in the four companies, and the resulting public outcry resulted in the election of a new Georgia legislature (1796) that canceled the sale and offered refunds to the land companies. However, much of the land had already been resold, and the new buyers insisted on keeping it. "Mississippi" © Emmanuel BUCHOT, Encarta, Wikipedia
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