The United Kingdom of Great Britain and Ireland remained officially neutral throughout the American Civil War (1861–1865). It legally recognized the belligerent status of the Confederate States of America (CSA) but never recognized it as a nation and neither signed a treaty with it nor ever exchanged ambassadors. Over 90 percent of Confederate trade with Britain ended, causing a severe shortage of cotton by 1862. Private British blockade runners sent munitions and luxuries to Confederate ports in return for cotton and tobacco. In Manchester, the massive reduction of available American cotton caused an economic disaster referred to as the Lancashire Cotton Famine. Despite the high unemployment, some Manchester cotton workers refused out of principle to process any cotton from America, leading to direct praise from President Lincoln. Top British officials debated offering to mediate in the first 18 months, which the Confederacy wanted but the United States strongly rejected.

Large-scale trade continued between Britain and the US. The US shipped grain to Britain, and Britain sold manufactured items and munitions to the US. British trade with the Confederacy fell over 90% from the prewar period, with a small amount of cotton going to Britain and hundreds of thousands of munitions and luxury goods slipped in by numerous small blockade runners operated and funded by British private interests.

The Confederate strategy for securing independence was based largely on the hope of military intervention by Britain and France. A serious diplomatic dispute erupted over the "Trent Affair" in late 1861 but was resolved peacefully after five weeks.

British intervention was likely only in co-operation with France, which had an imperialistic venture underway in Mexico. The possibility of recognizing the Confederacy was brought up in the summer and fall of 1863 in response to offensives in the east and west, but the Union victory at the Battle of Antietam and Republicans holding on in the 1862 midterms discouraged such moves. By 1863, intervention was no longer seriously considered, as Britain turned its attention elsewhere, especially toward Russia and Greece.Niels Eichhorn, "The Intervention Crisis of 1862: A British Diplomatic Dilemma?" American Nineteenth Century History (2014) 14#2, pp. 287–310. The costly and controversial Crimean War (October 1853 to February 1856) was in the still-recent past, at the outbreak of the American conflict. The United Kingdom had major commitments in British India in the wake of the Indian Rebellion of 1857. France had major imperial ambitions outside of the Western Hemisphere, and was considering or had already commenced military ventures in Morocco, China, Vietnam, North Africa, and Italy.

A long-term issue was the sales of arms and warships to the Confederacy. Despite vehement protests from the US, Britain did not stop the sales of its arms and warships for the Confederacy, including the CSS Alabama. The Alabama Claims were partially resolved peacefully after the Civil War when the US was awarded $15.5 million in arbitration by an international tribunal only for damages caused by the warships.

In the end, British involvement did not significantly affect the outcome of the war.Stephen R. Wise, Lifeline of the Confederacy: Blockade Running During the Civil War (1991). The US diplomatic mission, headed by Minister Charles Francis Adams Sr., proved to be much more successful than the Confederate missions, which were never officially recognized by Britain.Martin B. Duberman, Charles Francis Adams, 1807–1886 (1961), p. 333.

Confederate policies

Early in the war, Confederate opinion, led by President Jefferson Davis, was dominated by "King Cotton," the idea that British dependence on cotton for its large textile industry would lead to diplomatic recognition and mediation or military intervention. The Confederates had not sent out agents ahead of time to ascertain if the King Cotton policy would be effective. Instead, it was by popular demand, not government action, that shipments of cotton to Europe were ended in spring 1861. When the Confederate diplomats arrived, they tried to convince British leaders that the Union blockade was an illegal paper blockade.Charles M. Hubbard, "James Mason, the 'Confederate Lobby,' and the blockade debate of March 1862," Civil War History (1999) 45#3 pp 223–237 Historian Charles Hubbard writes:

Davis left foreign policy to others in government and, rather than developing an aggressive diplomatic effort, tended to expect events to accomplish diplomatic objectives. The new president was committed to the notion that cotton would secure recognition and legitimacy from the powers of Europe. The men Davis selected as secretary of state and emissaries to Europe were chosen for political and personal reasons – not for their diplomatic potential. This was due, in part, to the belief that cotton could accomplish the Confederate objectives with little help from Confederate diplomats.Hubbard, Burden Of Confederate Diplomacy (2000), p. 7

Hubbard added that Davis's policy was stubborn and coercive. The King Cotton strategy was resisted by the Europeans. Secretary of War Judah Benjamin and Secretary of the Treasury Christopher Memminger warned in vain that cotton should be immediately exported to build up foreign credits.Hubbard, Burden Of Confederate Diplomacy, pp. 21–25.

Union policies

The Union's main goal in foreign affairs was to maintain friendly relations and large-scale trade with the world and to prevent any official recognition of the Confederacy by any country, especially Britain. Other concerns included preventing the Confederacy from buying foreign-made warships; gaining European support for policies against slavery; and attracting immigrant laborers, farmers, and soldiers. Prior to the war's outbreak, Anglo-American relations had been cordial; the issues of Oregon, Texas and the border between the United States and British Canada were all resolved peacefully, and trade was brisk. Secretary of State William H. Seward, the primary architect of the Union's foreign policy, was intent on maintaining the principles that had served America well since the Revolution: "non-intervention by the United States in the affairs of other countries and resistance to foreign intervention in the affairs of the United States and other countries in this hemisphere."Jones (1992), pp. 2–3. Hubbard, p. 17. Mahin, p. 12.

British policies

British public opinion was divided on the American Civil War, though historians have noted that most Britons did not express an opinion on the matter.Duncan Andrew Campbell, English Public Opinion and the American Civil War (2003). The Confederacy tended to have disproportionate support from the Catholic, and Irish, with one national petition of 300,000 signatories in support of secession having almost half its support from the Irish, and Catholic clergy, a demographics that made up less than 25% of the 28.8 million population of the United Kingdom of Great Britain and Ireland (1861: Britain: 23, Ireland: 5.8 million). Similarly it is noted approximately 40,000 Irishmen (0.1% of the population), and 10,000 Englishmen (0.04% of the population) would sign on to serve the Confederacy, while 170,000 Irish (2.9% of the population), and 50,000 British (0.2% of the population) would fight for the Union, a ratio of 4.6:1 in favour of Union service. Of the 658 MPs sitting in the Commons in 1861, twenty one (3%) would join the Manchester headquartered, Confederacy supporting, Southern Independence Association, as would ten Lords. Others assert elites: the aristocracy and the landed gentry, which identified with the Southern planter class, and Anglican clergy and some professionals who admired tradition, hierarchy and paternalism. The Union was favored by the middle classes, the religious Nonconformists, intellectuals, reformers and most factory workers, who saw slavery and forced labor as a threat to the status of the working man.

As for the government, Chancellor of the Exchequer William Ewart Gladstone, whose family fortune had been based on slavery in the West Indies before 1833, supported the Confederacy. Foreign Minister Lord Russell wanted neutrality. Prime Minister Lord Palmerston wavered between support for national independence, his opposition to slavery and the strong economic advantages of Britain remaining neutral.A.G. Hopkins American Empire: a global history (Princeton UP, 2018) pp. 231–233.

Even before the war started, Lord Palmerston pursued a policy of neutrality. His international concerns were centered in Europe, where he had to watch both Napoleon III's ambitions in Europe and Otto von Bismarck's rise in Prussia. There were also serious problems involving Italy, Poland, Russia, Denmark and China. British reactions to American events were shaped by past British policies and their own national interests, both strategically and economically. In the Western Hemisphere, as relations with the United States improved, Britain had become cautious about confronting it over issues in Central America. As a naval power, Britain had a long record of insisting that neutral nations abide by its blockades, a perspective that led from the earliest days of the war to de facto support for the Union blockade and frustration in the South.Berwanger, p. 874. Hubbard, p. 18. Baxter, The British Government and Neutral Rights, p. 9. Baxter wrote that "the British government, while defending the rights of British merchants and shipowners, kept one eye on the precedents and the other on the future interests of the mistress of the sea."

Diplomatic observers were suspicious of British motives. The Russian Minister in Washington, Eduard de Stoeckl, noted, "The Cabinet of London is watching attentively the internal dissensions of the Union and awaits the result with an impatience which it has difficulty in disguising." De Stoeckl advised his government that Britain would recognize the Confederacy at its earliest opportunity. Cassius Clay, the United States Minister in Russia, stated, "I saw at a glance where the feeling of England was. They hoped for our ruin! They are jealous of our power. They care neither for the South nor the North. They hate both."Graebner, pp. 60–61.

Lincoln appointed Charles Francis Adams Sr., as minister to Britain. An important part of his mission was to make clear to the British that the war was a strictly internal insurrection and afforded the Confederacy no rights under international law. Any movement by Britain to recognizing the Confederacy officially would be considered an unfriendly act toward the US. Seward's instructions to Adams included the suggestion that it should be made clear to Britain that a nation with widely scattered possessions, as well as a homeland that included Scotland and Ireland, should be very wary of "set[ting] a dangerous precedent."Mahin, p. 47. Taylor, p. 177.

Lord Lyons was appointed as the British minister to the United States in April 1859. An Oxford graduate, he had two decades of diplomatic experience before being given the American post. Lyons, like many British leaders, had reservations about Seward and shared them freely in his correspondence, which was widely circulated within the British government.Warren, p. 82.Hubert F. Dubrulle, "Lord Lyons" in David Heidler, ed. Encyclopedia of the American Civil War pp. 1234–1235. As early as January 7, 1861, well before the Lincoln administration had even assumed office, Lyons wrote to British Foreign Secretary Lord Russell about Seward:

Despite his distrust of Seward, throughout 1861, Lyons maintained a "calm and measured" diplomacy that contributed to a peaceful resolution to the Trent crisis.

Slavery and trade with the Confederacy