Great Britain recognized that one of the factors contributing to Pontiac’s Rebellion had been the unchecked movement of land-hungry settlers into the area west of the Appalachian Mountains. Britain also realized that a plan was needed to develop the large areas won during the war in an orderly way. Hoping to placate the Indians while buying time to develop a long-range plan, King George III issued the Proclamation of l763. This royal decree, issued on October 7, 1763, prohibited settlement west of the Appalachian Mountains. It also required settlers who had moved west of the Appalachians to return to the eastern side of the mountains.

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terra cotta medallion depicting Benjamin Franklin, Jean-Baptiste Nini, 1777

While the dividing line established by the proclamation was never meant to be permanent, the decree angered the colonists for a number of reasons. Settlers who had been forced to flee their farms west of the Appalachian Mountains during the war found the proclamation prohibited them from returning to their former homesteads. Many of these settlers had fought for the British government during the French and Indian War. They believed the western lands were one of the spoils of war earned by their blood and felt betrayed by the British government.

The Proclamation of 1763 also troubled many of the wealthiest and most powerful men in the colonies, because many of these men had invested heavily in speculative land companies such as the Ohio Company (formed in 1747), the Loyal Company (formed in 1749), and the Mississippi Company (formed in 1763). These companies hoped to make money by obtaining title to large tracts of western land from the British government and reselling the land to settlers as they moved across the Appalachian Mountains. Some of the men who invested in these companies were George Washington, Thomas Jefferson, Patrick Henry, Richard Henry Lee, and Arthur Lee of Virginia and Benjamin Franklin of Pennsylvania. Unable to obtain a title for the land from the British government, the land companies could not make sales. Though agents of the companies were sent to London to argue on behalf of the land companies, the British government refused to reverse its position. While new treaties between the Indians and British agents opened up large tracts for development fairly quickly after the war, the land companies did not recover. The wealthy men who had invested in these companies suffered significant financial losses. These losses would be remembered in the years leading up to the American Revolution.

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