Despite his popularity as a spokesman for the religious right, David Barton's claim that Article III required schools to teach religion (The Myth of Separation, pp. 39) can be dismissed out of hand. The evidence for his claim is non-existent; Barton presents no footnotes to support his claim, recounts no historical evidence, references no case law, and provides no analysis of the Article's language. In fact, a moment's study reveals that Barton simply reads his accommodationist biases into the text: while the Article holds up "religion, morality, and knowledge" as being necessary to "good government and the happiness of mankind," only "schools and the means of education" are "encouraged." More generally, Barton's claim is at odds with all reputable scholarship on the Ordinance; historians and legal scholars do not even consider that Article III required schools to teach religion. To be sure, educational historians view Article III as an important milestone in public education (primarily as a catalyst for the land grant system that proved instrumental in furthering higher and secondary education in the Old Northwest), but none of these authorities say anything that can be construed as sympathetic to Barton's claim. If Article III required religion to be taught in schools, this fact seems to have escaped the notice of history.
Additionally, we note that Barton devotes several paragraphs of his discussion of the Northwest Ordinance to demonstrating that the language of Article III was incorporated into the Constitutions of several states later formed from the Northwest Territory (The Myth of Separation, pp. 39-40). Curiously, case law under these Constitutions demonstrates that the language of Article III did not force schools to teach religion. In 1872, for example, the Ohio Supreme Court affirmed that the city of Cincinnati was acting Constitutionally when it forbade religious instruction and Bible reading in the public schools, despite the petitioners' claim that the presence of Article III language in the Ohio Constitution required such instruction (see Minor v. Ohio, 23 Ohio, 211; a more detailed discussion of this case can be found here).