the "suffering traders" affected by Pontiac's War obtained the Indiana Grant as compensation
Source: Library of Congress, A new map of the western parts of Virginia, Pennsylvania, Maryland, and North Carolina; comprehending the River Ohio, and all the rivers, which fall into it (Thomas Hutchins, 1778)
The French and Indian War blocked the Ohio Company, the Loyal Land Company and other land speculators from selling parcels from their grants in the Ohio River watershed. Pontiac's War in 1763 further delayed occupation of the lands west of the Allegheny Front.
During the times when the colonial boundaries and the authority to negotiate land deals with tribes were poorly defined, Philadelphia-based land speculators sought to obtain a massive land grant in the lands along the Ohio River. William Trent, Samuel and Thomas Wharton, and others formed the Illinois Company in March 1766 and requested a 1,400,000 acre land grant. Among the investors in the company were Sir William Johnson, the Superintendent of Indian Affairs in the Northern Department, and his deputy George Croghan. Sympathetic to the company was the agent for the Pennsylvania colony in London, Benjamin Franklin.1
Sale of western lands were frozen after George III issued the Proclamation of 1763. That was in response to Pontiac's Rebellion, where Native Americans united to resist British occupation of the Northwest Territory.
George III's proclamation impacted colonial leaders with enough wealth and influence to invest in various land companies; they were unable to convert their claims into cash by surveying and selling parcels. In addition, Virginia was unable to award the land bounties that Governor Dinwiddie had promised to incentivize men to enlist in the colony's Virginia Regiment during the French and Indian War.
The 1,400,000 acre Illinois Company proposal was not advancing, so the investors called on George Crogan (already in London) for help. He recommended to the Whartons and other investors that they adopt a new justification for a land grant - the claims of the "suffering traders."
At the start of the French and Indian War, Native Americans and their French allies had seized goods shipped by various colonial traders to backcountry locations to exchange for furs. More goods had been lost at the start of Pontiac's War almost a decade later. In 1765, the suffering traders had hired George Crogan and tasked him to get the government to compensate them for their property loss.
The British government owed nothing to these traders or their financial backers; they had sought high profits by taking high risks and had suffered a business loss. Crogan proposed the traders be given land from the Native Americans as compensation. The land speculators saw the potential in that technique, and in 1766 they paid the traders for their right to make the claim for compensation.2
Ben Franklin described the new strategy of seeking land from the Native Americans rather than a royal grant in a 1763 letter:3
Sir William Johnson was the Superintendent for Indian Affairs for the Northern Department. In negotiations with western tribes, he mixed his official responsibilities with his private agenda as an investor in the Illinois Company. He arranged a 1765 meeting with a group of Haudenosaunee chiefs at his mansion in the Mohawk River Valley in New York, Johnson Hall. At that gathering, the chiefs agreed to transfer some land to the suffering traders.
Johnson calculated that compensation for the traders whose goods were taken in 1754 at the start of the French and Indian War was unlikely. That property was lost during a war with France, but the 1763 property had been lost when there was peace in North America. William Trent, who built the first fort at the Forks of the Ohio and was one of the traders who had lost property in 1754, was a suffering investor who remained a major investor as the Illinois Company morphed into the Indiana Company. Ben Franklin's son William was also an investor in the Indiana Company.
Though the Haudenosaunee chiefs were willing to offer land to Johnson and clear the complaints of the suffering traders, the Proclamation of 1763 was still a barrier. If the boundary had remained the Eastern Continental Divide, there would be no value for the Indiana Company in obtaining rights to lands in the Ohio River valley.
That problem was addressed by getting officials in London to agree to move the proclamation line as part of a deal. As Superintendent for Indian Affairs for the Northern Department, William Johnson led the British side of the negotiations in October-November 1768 to purchase land and allow gradual settlement which the Haudenosaunee would accept.
The Indiana Company tactic of getting land rights incorporate in the 1768 Treaty of Fort Stanwix negotiations was based in part on the fixed location of Pennsylvania's western boundary. Though the colony's exact western edge was still undefined at the time (it was not settled until 1784), everyone knew that Penn's grant limited the width of his colony to five degrees of longitude.
Unlike Virginia, Pennsylvania did not have western land claims extending to the Mississippi River. Unlike colonial officials in Williamsburg, colonial officials in Philadelphia had few options for rewarding influential land speculators. However, royal officials had unlimited authority to negotiate deals which would compensate the investors/suffering traders, independent of the boundaries defined in the 1609 charter of Virginia or the 1682 charter of Pennsylvania.
In an agreement signed two days before the Treaty of Fort Stanwix, a chunk of land was carved out for the Indiana Company. The boundaries of the Indiana Company tract extended from the:4
In the 1768 Treaty of Fort Stanwix, the British acquired title to lands south of the Ohio River extending to the mouth of the Tennessee River. The Haudenosaunee negotiated terms for the Shawnee, Delaware, Mingoes and others who occupied the Ohio Country. The Haudenosaunee claimed they were the landowners due to previous conquest of the other tribes, and had exclusive rights to speak for all the Native Americans at the treaty negotiations.
The tribes living north of the Ohio River who hunted in Kentucky were forced to be silent at Fort Stanwix. They had to accept the deal at Fort Stanwix, but later joined in Pontiac's Rebellion and killed intruding settlers. By design the Cherokee were not involved in the Treaty of Fort Stanwix.
The Cherokee and Haudenosaunee had agreed to a treaty in February 1768. The Cherokee then made a separate arrangement with John Stuart, the Superintendent for Indian Affairs for the Southern Department. In the 1768 Treaty of Hard Labor, the Cherokee ceded their claims south of the Ohio River and west to the mouth of the Kanawha River. That cession included the 2,000,000 acres sought by the Indiana Company and the overlapping 2,500,000 acres sought by the rival Mississippi Company. Arthur Lee was its champion. He justified the Mississippi Company request by using the need to provide land for the veterans of the French and Indian War.
the "suffering traders" obtained the Indiana Grant as compensation in the 1768 Treaty of Fort Stanwix, and land speculators expanded it to the proposed 2,000,000 acre colony of Vandalia
Source: Wikipedia, Ohio Company
To get royal conformation of the company's right to the 2,000,000 acres, Samuel Wharton and William Trent sailed to London in 1769. British officials there were angry that William Johnson had exceeded his instructions in negotiating the Treaty of Fort Stanwix, and initially declined to confirm the treaty.
Lord Hillsborough, Secretary of State for the Southern Colonies and a member of the Board of Trade, was especially opposed. He considered authorizing more settlement west of the Proclamation Line of 1763 to be a bad policy. Increasing the number of colonists moving into Native American homelands would create the unnecessary risk of triggering another war like Pontiac's Rebellion in 1763.5
Johnson had been authorized in his treaty negotiations to move the proclamation line, the barrier to colonial settlement, westward to the mouth of the Kanawha River. That expansion would have added about 150 miles of lands stretching to the west.
However, at Fort Stanwix Johnson arranged for the Haudenosaunee to authorize colonial settlement not just to the Kanawha River, but for an additional 350 miles further to the west. In the 1768 treaty, the Haudenosaunee relinquished their rights to all the land south of the Ohio River stretching westward (downstream) to the mouth of the Tennessee River. That was just 30 miles east of the Mississippi River.
The Privy Council resolved its internal differences and did approve the Treaty of Fort Stanwix in late 1769, but Samuel Wharton and William Trent were unable to get approval of the separate Haudenosaunee sale to the Indiana Company.
To improve their ability to lobby key officials in London, the Indiana Company joined forces with Thomas Walpole and additional allies in England. Thomas Walpole was well-connected as the nephew of Sir Robert Walpole, who had established the role of Prime Minister in Great Britain.
The additional investors ("proprietors") joined forces on December 27, 1769 and formed the Grand Ohio Company. It was also called the Walpole Company, and later the Vandalia Company. Benjamin Franklin was a member, and used his influence in London to seek approval of a land grant that violated the Proclamation of 1763.
Some of the original claimants to the Indiana grant agreed to stop lobbying for their grant. Getting title to some western land as part of the Grand Ohio Company would be better than retaining 100% of the Indiana Company claim, which no British official in London appeared willing to authorize. Samual Wharton and William Trent ensured they held shares in the Grand Ohio Company. Other Indiana Company investors who were still back in Pennsylvania were cut out of the deal.
The Grand Ohio Company asked for a royal charter for a brand new colony south of the Ohio River. The original request was for 2,500,000 acres. The Earl of Hillsborough, who was Secretary of State for the Colonies, supported a strict interpretation of the Proclamation of 1763 and objected to western settlement. He told the Grand Ohio Company investors to aim higher, and they expanded the request and sought a 20,000,000 acre grant that included all of modern-day West Virginia and about 1/3 of Kentucky.
Hillsborough made the suggestion because he thought such a massive request would have lower probability of approval by the Privy Council. The Grand Ohio Company investors proposed acquiring more land than any previous land company had envisioned, because a key official was trying to undercut their chance of success. The 20,000,000 acre grant boundaries would extend westward from the crest of the Allegheny Mountains to the mouth of the Scioto River.
On May 7, 1770 the Ohio Company claimants, losing hope that their 1749 grant for up to 500,000 acres in the Ohio River Valley would be honored, agreed to join the Grand Ohio Company (renamed the Vandalia Company). They were given two of the 72 shares. If what was called the Walpole Grant in London ended up awarding the investors 2,000,000 acres of land, the Ohio Company members would be entitled to only a small percentage of their original 500,000 acres.
The Privy Council rejected the Mississippi Company's request for a 2,500,000 acre grant in 1770. Lord Hillsborough got the Board of Trade to oppose the request from the Grand Ohio Company, but then Benjamin Franklin outmaneuvered him.
Franklin convinced the Privy Council members that the Native Americans would not oppose the land grant. He also argued that the colonists in the Mississippi River watershed would choose to ship their goods across the Appalachians rather than float down to New Orleans, which the Spanish controlled. Franklin recognized the desire to increase trade with seaports on the Atlantic Ocean, thus increasing business in England.
The Privy Council gave its approval in 1772. The Privy Council decision may have been affected by more than imperial concerns. the Grand Ohio Company had granted shares to key decisionmakers, so Privy Council members had a personal economic stake in the decision. Having lost the argument, Lord Hillsborough resigned his position as Secretary of State for the Colonies.
The Walpoles renamed their Indiana proposal after Prime Minister William Pitt. The name "Pittsylvania" was dropped after Pitt lost power. The Walpoles chose the name "Vandalia" in 1773. That honored the German heritage of King George and his wife Charlotte, supposedly descended from the Vandals.
Samuel Wharton anticipated being appointed governor and living at Fort Pitt. The two shares of the Vandalia Company owned by the Ohio Company investors were now worth 556,000 acres.6
The investors in the Grand Ohio Company had succeeded. Investors who had backed other land companies, and had not consolidated their claims with the Walpoles, ended up with nothing.
The right to settle Vandalia also competed with land grants that the colony of Virginia already had promised. In 1754 Governor Dinwiddie had declared that 200,000 acres would be awarded to men who enlisted in the Virginia Regiment at the start of the French and Indian War.
In 1773 Governor Dunmore in Williamsburg decided to open a land office and approve surveys and patents in the disputed territory for those veterans. Since 1770 George Washington had been surveying parcels that could be claimed by military warrants based on French and Indian War service, which Washington had earned and also acquired from other soldiers.
Washington and Dunmore were racing to beat the creation of Westmoreland County by Pennsylvania officials and competing "official" surveys and patents authorized by that colony. Both colonies also were racing to beat claims of the Vandalia Company, which had great influence with the Privy Council in London.
In 1774 Lord Dunmore himself came to Fort Pitt. He commanded part of an army that forced the Shawnee to sign away their land claims south of the Ohio River, a deal formalized in the Treaty of Camp Charlotte. The Virginia governor directed Dr. John Connolly to occupy the site of Fort Pitt, which the British had destroyed when they abandoned it in 1772. Pennsylvania officials then arrested Connolly. After he was released from jail in Westmoreland County, Connolly brought 200 Virginia militia and seized control of Pittsburgh.7
However, plans for formalizing Vandalia faded as British officials focused on American rebelliousness in 1774-1775. Benjamin Franklin created a major problem when he was caught releasing private letters sent by the royal governor in Massachusetts. That breach of honor led to Franklin being forced to endure a one-hour diatribe at the Privy Council by Alexander Wedderburn on January 29, 1774. Wedderburn was also the Solicitor General who had to complete the final steps required to formalize the Privy Council decision to approve the Grand Ohio Company grant, and he never took the necessary action.
the Privy Council confronted Benjamin Franklin on January 29, 1774 for his support of rebellious Massachusetts, and the 20,000,000 acre grant for Vandalia was never finalized
Source: American Philosophical Society Library, Franklin before the Lords in Council, 1774
In addition to Wedderburn, other British officials saw few benefits from creating Vandalia. Communities of land-hungry settlers west of the mountains would have little desire to obey royal policies expressed by the Superintendent for Indian Affairs for the Northern Department and for the Southern Department. The British sought to ally with the Native Americans as the colonists became rebels, so authorizing intrusions into their territory would have been counter-productive.
In 1775 William Trent tried "Plan B." He lobbied the Continental Congress to approve acquisition of the original Indiana parcel. Despite offering shares of the Indiana Company as a bribe to eight delegates, he could not overcome the steady opposition of the influential Virginia delegation in the Continental Congress. In the 1780's, Samuel Wharton used his position in the Continental Congress to seek some sort of land grant based on the claims of the suffering traders.
The Indiana Company reorganized, including the original investors, on March 20, 1776 in Philadelphia. Recognizing that a grant from British officials would no longer be recognized as valid, they tried to pressure the Continental Congress to formalize their rights to the original Indiana grant. That grant had been made by the Haudenosaunee to the suffering traders during negotiations for the 1768 Treaty of Fort Stanwix.
Delegates to the Continental Congress were pressured by other land companies for competing claims to western lands, and separate colonies claimed overlapping authority ove the Ohio River Valley. The delegates also knew that the western lands could be claimed by veterans granted land bounties in order to get men to enlist in the Continental Army, and those lands could be sold to generate revenue for the new national government. As a result, the delegates never approved any of the land grants.
The authority of the newly-independent states to approve grants was not resolved until 1784. The new national government was given that power when Virginia ceded its claim to the Northwest Territory. That cession made no provision for the various land companies with claims dating back to 1749. Land speculators failed to get the new United States of America to approve old royal grants.8
the proposed colony of Vandalia expanded far beyond the boundaries of the Indiana land claim
Source: Wikipedia, Ohio Company
George Croghan sold his share on the Indiana Company to two of the Wharton brothers at the end of 1868, so he managed to generate some revenue. Suffering traders who sold their claims for cash to William Trent or the Walpoles ended up being the only ones to benefit from the speculation because the Illinois Company, Indiana Company, Grand Ohio Company, and the Vandalia Company sold no land. Investors received no profits.9
"Vandalia" remains on the map today as a county in West Virginia. In 1863, the western counties of Virginia created a new state separate from the Restored Government of Virginia. One name proposed for the new state was Vandalia, before final adoption of the name West Virginia.10
in the 1768 Treaty of Fort Stanwix, the Iroquois agreed to compensate the "suffering traders" with land to be called Indiana
Source: Boston Public Library, Norman B. Leventhal Map and Education Center, Carte des environs du Fort Pitt et de la nouvelle province Indiana (Thomas Hutchins, 1781)
in the 1790's, the Federal government sold large parcels of the public land north of the Ohio River to land speculators
Source: Library of Congress, The United States of North America, with the British territories (William Faden, 1793)