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The Phelps and Gorham Purchase was the purchase in 1788 of the pre-emptive right to some 6,000,000 acres (24,000 km²) of land in western New York State for $1,000,000 (roughly equivalent to $20,000,000,000 in 2005). This was all land in western New York west of Seneca Lake between Lake Ontario and the Pennsylvania border. The purchasers were Oliver Phelps and Nathaniel Gorham, both of Massachusetts, and the seller was the Commonwealth of Massachusetts. (In some discussions of this subject elsewhere, the Phelps and Gorham Purchase refers to all 6,000,000 acres (24,000 km²) and in others it refers only to the 2,250,000 acres (9,100 km²) upon which Phelps and Gorham managed to extinguish Indian title. This comes about because although Phelps and Gorham purchased pre-emptive rights to all 6,000,000 acres (24,000 km²;), they were only able to extinguish Indian rights—and obtain clear title—to the portion east of the Genesee River.)

Following the American Revolution, western New York was opened up for development as soon as New York and Massachusetts compromised and settled their competing claims for the area in December 1786 by the Treaty of Hartford. The compromise was that, while New York would have sovereignty over the land, Massachusetts would have the "pre-emptive" right to obtain title from the Indians.

By act of the Massachusetts Legislature, approved April 1, 1788 (Laws and Res. 1786-87, c. 135, p. 900), it was provided that 'this Commonwealth doth hereby agree, to grant, sell & convey' to Oliver Phelps and Nathaniel Gorham, for a purchase price was $1,000,000, payable in three equal annual instalments of certain Massachusetts securities then worth about 20 cents on the dollar. , 'all the Right, Title & Demand, which the said Commonwealth has in & to the said Western Territory' ceded to it by the Treaty of Hartford. On July 8, 1788, the Five Indian Nations (Mohawks, Oneidas, Onandagas, Cayugas, and Senecas) executed a deed or treaty extinguishing the Indian claim to the territory described in it and conveying that territory to Phelps and Gorham. The description embraces approximately the east one-third of the territory ceded to Massachusetts by the Treaty of Hartford, and begins at a point 'in the north boundary line of the State of Pennsylvania in the parallel of forty-two degrees north latitude at a point distant eighty-two miles west from the northeast corner of Pennsylvania on Delaware river.' (the Pre-emption Line)

Phelps and Gorham wasted no time in exploiting their purchase. On July 8, 1788, they extinguished Indian title to all land from the Pre-emption Line west to the Genesee River, as well as to lands west of the Genesee running south from Lake Ontario approximately 24 miles (39 km) and extending west from the river 12 miles (19 km) from "the westernmost bend of the Genesee," with this western boundary paralleling the course of the Genesee. This 184,300-acre (746 km²) tract west of the Genesee was known as The Mill Yard Tract, so named because Phelps and Gorham asked the Indians for land west of the Genesee at the Falls so they could build a sawmill and gristmill. For this extinction of title, Phelps and Gorham paid the Indians $5,000, plus an annuity of $500. The area to which title was extinguished comprised some 2,250,000 acres (9,100 km²), including the Mill Yard Tract.

Map of Western New York
Showing Phelps & Gorham's Purchase
(including the Mill Yard Tract)
The Holland Purchase and the Morris Reserve

Due to Phelps and Gorham's default on the 1790 instalment, the preemptive right to lands of the Phelps and Gorham Purchase west of the Genesee River, comprising some 3,750,000 acres (15,000 km²), reverted back to Massachusetts on March 10, 1791. On March 12, 1791, Massachusetts agreed to sell the pre-emptive right to the lands west of the Genesee to Robert Morris for $333,333,33. The land was conveyed to Morris in five deeds on May 11, 1791. At that time, Morris was the richest man in America, as well as a signer of the Declaration of Independence and financier of the American Revolution.

Morris then re-sold most of these lands in December 1792 and in February and July 1793 to the Holland Land Company (known as The Holland Purchase). Morris, however, reserved for himself 500,000 acres (2,000 km²) in a twelve-mile-wide (19 km) strip along the east side of the lands acquired from Massachusetts, from the Pennsylvania border to Lake Ontario, known as The Morris Reserve. At the north end of the Morris Reserve, an 87,000-acre (350 km²) triangular-shaped tract ("The Triangle Tract") was sold by Morris to Herman Leroy, William Bayard and John McEvers, while a 100,000-acre (400 km²) tract due west of the Triangle Tract was sold to the State of Connecticut. In September 1797, Morris extinguished the remaining Indian title for all the lands west of the Genesee at the "Treaty of Big Tree" (Geneseo).

The Phelps and Gorham lands east of the Genesee River that had not already been sold were also acquired by Robert Morris in August 1790—some 1,200,000 acres (4,900 km²)—who re-sold them to The Pulteney Association.

• Phelps & Gorham Treaty of July 4-8, l788, Historical Aspects of the, Rochester History magazine, by Blake McKelvey Vol 1 No(s)1 (January 1939) (PDF format)
• The Field Notes of Col. Hugh Maxwell's Pre-emption Line Survey in the Phelps and Gorham Purchase transcribed by John M. Robortella
• For Animations of these Land Acquisitions click Map Scene 5 Map animation by Dr. Robert Spiegelman