Although Madison prevailed on the structure of the new federal government, he could not quell the concerns of the smaller (or more lightly populated) states. There was a general concern that Virginia would be able to dictate to the other states, given proportional representation. Debate on this issue was fierce & finally, on July 2nd, a Grand Committee was selected to resolve these issues. Each state selected one member & Mr. Franklin was appointed to chair. By July 12th a compromise had been reached: referred to ever since as the Grand Compromise. The upper house (the Senate) would feature equal representation for each of the states. The lower house would be based on proportional representation. The formula called for one representative for every 40,000 inhabitants of a state. The compromise on this point was that slaves, who were not otherwise considered, would count as three fifths of a freeman. This restored some advantage to the southern states. With these allowances the convention was able to continue

The 3/5 compromise was when the government decided to count African American slaves as 3/5 of a person in the states population count! This had a big effect on the great compromise.