Although the Civil War was by nature a domestic affair, foreign policy played an important role in the progress of the conflict. In the spring of 1861, Secretary of State Seward had suggested that disunion could be avoided entirely if the United States chose to engage itself in a European war. Although perhaps correct in its reasoning, Seward's proposal was of dubious merit, and was never seriously considered by Lincoln.
By the summer of 1861, Britain and France had pledged their neutrality in the conflict. Such a pledge was a weak endorsement of the Union at best. While Queen Victoria of England and Emperor Napoleon III of France recognized the southern states as belligerents, this did not prevent the Confederacy from attempting to court the European powers for aid and potential alliances. By the Confederate logic, an old-world monarchy would be pleased to see the emerging system of democracy undermined. Further, an aristocracy tends to sympathize with an aristocracy. Additionally, the European nations were dependent on the southern states for their cotton supply.
In November, near disaster visited the Union with the uproar of the Trent Affair. As per Scott's Anaconda Plan, a Union captain seized two Confederate representatives aboard a British mail steamer and had them imprisoned in Boston. This act of aggression was met with considerable outrage overseas, and Britain found itself provoked to point of declaring war. After 11,000 British troops were sent to Canada, Lincoln finally decided to free the Confederates in order to avoid an international fiasco.
Nevertheless, many northerners continued to agitate for war with Britain, preserving fresh memories of the War of 1812, when control of the seas in the Western hemisphere had also been a point of conflict. In fact, British industry would continue to supply the Confederacy with what amounted to war ships until an act of the British parliament prevented further sale in September of 1863. While this was a sweeping extension of parliamentary power over the British economy, it was justified as a necessary action under the very real threat of war from the Union.
Although the British government sought to disassociate itself from the Confederacy after the Trent Affair, certain members of parliament continued to keep a watchful eye on the progress of the Civil War. William E. Gladstone, who would eventually accede to the prime ministership, gave a speech in the autumn of 1862 in which he dared to "anticipate with certainty the success of the Southern States so far as regards their separation from the north." While this was something of a radical opinion in Britain, the bald fact that a credible politician could maintain that opinion was made possible by a string of Union mistakes and Southern successes in the field.
After the disaster at First Manassas, Lincoln replaced McDowell with the upstart McClellan, who took command of the eastern theater on the strength of his successes in Western Virginia. But after further defeats in Virginia at Wilson's Creek and Ball's Bluff during the month of October, McClellan decided to regroup with his Union forces for the duration of the winter. The Anaconda Plan would suffice as McClellan prepared for his Peninsular Campaign against Richmond in the spring.