Final answer:
The 'landed' states gave up their territorial lands in the western settlement. Therefore, the correct option is C. Territorial.
Step-by-step explanation:
In the western settlement, the 'landed' states gave up their territorial lands. These were the lands that the colonies with frontiers abutting the Appalachian and Allegheny Mountains expected to be opened to settlement after the signing of the Peace of Paris.
However, the British viewed the question of the western lands differently and did not want colonists to settle beyond the Appalachians.