At the time of Confederation, the United States was extending its territory westwards. Between 1864 and 1890, nine new states were created, four of which were on the Canadian border. In 1867, the United States purchased Alaska from Russia. The end of the American Civil War saw renewed investment in land, in railway construction and in the exploitation of natural resources in the American west. At the end of the 1860s, American merchants and colonists began to look at lands in the Canadian west as a place where they could get established and the American government did not hide the fact that such a possibility was attractive.
The Civil War made Canada's defence a touchy subject. Great Britain was reluctant to invest in such a major undertaking. Confederation of the British colonies seemed a more logical choice. It would allow transferring the administration of the "colonies" to a new, duly constituted, state and would put the brakes on the goals of the United States.
The fear of American expansionism then led Great Britain to favour the purchase, by Canada, of the Northwest Territory and Rupert's Land. Great Britain wanted to avoid armed conflict with the United States at any cost. If the coveted territory were under the jurisdiction of a legally constituted country, Canada in this case, rather than under the jurisdiction of a trading company, logic would dictate that the United States would stop seeing annexation as a possibility. Eliminating this uncertainty with regard to the ownership of the Northwest Territory and of Rupert's Land, before 1867, would also quell the fervour of American claims.