The Southwest Territory, also known as the Territory South of the River Ohio, was an organized territory of the United States formed on May 26, 1790. North Carolina had claimed this land, but as a condition of joining the Union, it gave up its claim to this land under an act passed by the North Carolina General Assembly, submitted to the First U.S. Congress on February 25, 1790 and accepted by Congress on April 2, 1790. The ordinance establishing the Southwest Territory was patterned after the Northwest Ordinance which established the Northwest Territory in 1787.
Although called the Territory South of the Ohio River (and east of the Mississippi River), it did not include what is now Kentucky, which was still a part of Virginia and was already in the process of becoming a state. It also did not include land south of what is now Tennessee, as some of that land was still claimed by Georgia and the rest was disputed with Spain. (The land south of Tennessee was later organized as the Mississippi Territory.)
Before becoming a territory, several counties were organized as western counties of North Carolina between 1777 and 1778. After the Revolution, North Carolina was preoccupied with the aftermath of the war and was not very diligent about maintaining the distant counties, which were frequently beset by hostile Native American tribes, and needed forts, safe roads, and open waterways. The weak federal government under the Articles of Confederation was in no position to help either, so in 1784 these counties formed the breakaway State of Franklin. John Sevier was named governor and the area began operating as an independent, although unrecognized, state. At about the same time, settlers in the other parts of the state were making overtures for an alliance with Spain, which controlled the lower Mississippi. North Carolina began to reassert control, and the State of Franklin quietly ceased to exist in 1788.
When North Carolina ratified the U.S. Constitution in 1789, it also ceded its claim to territory west of the Appalachian Mountains. Upon formation of the Southwest Territory, President George Washington appointed William Blount as territorial governor. Blount founded Knoxville as the territorial capital. Land speculation was a booming business in the new territory and most of the prominent politicians had a stake in things. Expanding white settlements inevitably encroached upon Native American lands, despite government prohibitions. In 1792, Cherokee and Creek warriors attacked settlements in the Cumberland area. Settlers in this area formed a local militia and in the Nickajack Expedition of 1794 took it upon themselves to raze several Chickamauga villages. Threats of similar actions against the Creek brought a period of reapproachment with the native tribes.
In 1795, a census revealed there were enough people to petition for statehood and a referendum showed a three-to-one majority in favor of becoming a state. Governor Blount convened a constitutional convention and delegates drafted a state constitition. Voters elected Sevier as governor and the new legislature selected Blount and William Cocke as U.S. Senators and Andrew Jackson as the U.S. Representative.
The Southwest Territory was the first federal territory to petition to join the Union and there was some dissension in the U.S. Congress about how to proceed. Nonetheless, Tennessee was admitted to the Union on June 1, 1796 as the 16th U.S. state. The Southwest Territory ceased to exist at that point.
Note: The historic Southwest Territory should not be confused with the Southwestern United States of today.