After the explorations of the Kentucky territories led by Daniel Boone, the Transylvania Company established itself to colonize the territories. The Company was partially promoted by the British government wanting to fill the gap between the Atlantic colonies and Louisiana, but as it pretended to form a new colony, it generated some opposition from Virginia and North Carolina, who were in the verge of declaring their independence.
In the eves of the Declaration of Independence, the 22nd July, 1776, the representatives of Virginia and North Carolina opposed the representation of Transylvania, claiming the territories west of the Appalachians as extensions of their own colonies.
Boone and Henderson were in an uncomfortable position. They feel themselves much more as Americans than as English; as the Independence War begun, they particularly dislike British policies of allying with the Indians against the rebellious colonists, but, on the other hand, the British Government has supported their efforts to build the colony of Transylvania while the fellow colonist had opposed.
Reluctantly, Transylvanians gave their support to the royalists on the promise that Transylvania would be exempted from some taxation and the British authorities should protect colonists from the Indians (or allow the colonists to defend themselves), and encouraging colonization.
Despite the Spanish incursions against New Orleans and up the Mississippi, British fortifications in St Louis resisted, and from Detroit and St Louis, the British royalists managed to support the Transylvanian colonists during the war.
As the war was over with the second treaty of Paris, Britain recognized the independence of the new United States of America, and the USA recognized the British authority over Transylvania.
A British Governor was appointed to Boonesborough, Transylvania, which was not well received by the original colonists. The Governor just tried to keep as low profile as possible, and did very little to enforce British laws.
Transylvania got a great influx of settlers (the second great migration) from southern royalists that flew from the USA, but most of the original settlers were not particularly loyal to the British crown, and they dominated the political scene in Boonesborough. In the territories of East Mississippi, south of Transylvania, there were also an influx of American settlers, many of them moving with slave based plantations.
Louisiana was better in this respect, but just because Louisiana was further away from the USA. The dynamics in the delta of the Mississippi were tense, however. Baton Rouge and New Orleans were too close and too populated, but they have enjoyed some peace so ever, and there was even some trade developing between the Spanish and the British colonies.
British outposts in the Mississippi were becoming towns, and St Louis was becoming a small city. British explorers were trying to identify the different Indian communities inland, and if there were any other resource than arable land.
Nothing so far. Lots of arable land and nobody to claim it, except Indians and Americans.
Henderson kept promoting colonization of Transylvania from Americans, many of them not particularly loyal. This led the British to finally arrest him in 1788 on charge of land speculation, and replacing the governor.
A more severe British rule, headed in Nashborough, was promoted to solve the situation of Americans pouring in Transylvanila and East Mississippi. An oath of loyalty to the King of the United Kingdom of Great Britain was require for them to be recognized property on estate or chattel. Some did, some just kept plowing land and managing slaves without a title from the king authorizing their right, and Americans kept pouring Transylvania, grown to include East Mississippi.
Boone moved further west, to Missouri, where the British government granted him a large tract in the Femme Osage valley and made him district magistrate in 1799.