Page "Northwest Territory" Paragraph 7

Several states ( Virginia, Massachusetts, New York, and Connecticut ) then had competing claims on the territory.

Other states, such as Maryland, refused to ratify the Articles of Confederation so long as these states were allowed to keep their western territory, fearing that those states could continue to grow and tip the balance of power in their favor under the proposed system of federal government.

As a concession in order to obtain ratification, these states ceded their claims on the territory to the federal government: New York in 1780, Virginia in 1784, Massachusetts and Connecticut in 1785.

So the majority of the territory became public land owned by the U. S. government.

Virginia and Connecticut reserved the land of two areas to use as compensation to military veterans: The Virginia Military District and the Connecticut Western Reserve.

In this way, the United States included territory and people outside any of the states.