For some time after being admitted to the Union in 1796, Tennessee was involved in a dispute with the United States and North Carolina over the title to land within Tennessee borders. In 1806 an agreement was reached under which the United States relinquished all claims to land in Tennessee lying outside a “Congressional Reservation” consisting of all of West Tennessee and the southwestern corner of Middle Tennessee. In exchange, Tennessee was required to satisfy the claims of all holders of North Carolina civil and military land warrants and also to set aside within the region south of the French Broad River and east of the Tennessee River (where North Carolina land warrants were not applicable) two tracts of land of one hundred thousand acres each, to be sold for the support of academies and colleges. The academy lands were to finance the establishment of an academy in each county of the state, and the college tract was to support two colleges, one in East Tennessee and one in Middle Tennessee.
In October 1807 the legislature accepted the proposal from the trustees of Blount College and passed an act requiring that the funds and property of Blount College be transferred to a new institution, East Tennessee College, which would be endowed with the East Tennessee portion of the sale of lands.
Most of the land to be sold was occupied by squatters who refused to pay. The State made its first real effort to collect payment in 1823, requiring installment payments. When squatters refused to pay and lands became subject to foreclosure, the resulting bitterness resulted in the Tennessee’s cancellation of the program of acquisition of the land. In 1829 the legislature offered the colleges and academies a half township of land each in the region south of the Hiwassee River, to which Indian title had not been extinguished, in return for relinquishing all remaining claims to lands previously granted. The 1829 proposal was reinstated in 1838, the Cherokee having been removed from the land, and the proposal was accepted by all parties. East Tennessee College disposed of its land in 1839 for a little less than $34,400.