Five hundred thousand workers have been put out of work in British cotton mills due to the blockade of Southern-grown cotton during the American Civil War, in which Britain is officially neutral, British leaders personally dislike American republicanism and favor the more aristocratic Confederacy, as it had been a major source of cotton for textile mills.

Prince Albert had been effective in defusing a war scare in late 1861.

The British people, who depend heavily on American food imports, generally favor the United States.

What little cotton is available comes from New York, as the blockade by the U.S. Navy had shut down ninety-five percent of Southern exports to Britain.

In September 1862, during the Confederate invasion of Maryland, Britain (along with France) had contemplated stepping in and negotiating a peace settlement, which could only mean war with the United States.

But in the same month, U.S. president Abraham Lincoln had announced the Emancipation Proclamation.

Since support of the Confederacy now meant support for slavery, there was no longer any possibility of European intervention.

Meanwhile, the British sell arms to both sides, build blockade runners for a lucrative trade with the Confederacy, and surreptitiously allow warships to be built for the Confederacy.

The warships had caused a major diplomatic row (it will be resolved in the Alabama Claims in 1872, in the Americans' favor.)