On December 26, 1861, President Lincoln and his cabinet decided to release imprisoned Confederate envoys James Mason and John Slidell in order to avoid the possibility of war with Britain, thus concluding the diplomatic uproar known as the Trent Affair.
It all started when an overzealous Union commander, Charles Wilkes, stopped a British mail ship, the Trent, in the Caribbean on November 8. Wilkes knew that the ship was carrying Mason and Slidell on their way to Europe to argue the Confederacy’s case in London and Paris. Wilkes had the Trent boarded, and Mason and Slidell (and their two secretaries) were illegally removed from the ship. (To make it legal, Wilkes would’ve had to capture the ship as well and take it to a maritime prize court to have the legality of the seizure decisively determined—but Wilkes only took the two men and not the ship.)
When Wilkes made it back to America with the four Confederates in tow, the nation was ecstatic, with the Secretary of the Navy expressing his thanks and Congress even awarding him a gold medal for his actions. Not only had the United States thumbed its nose at the Confederacy, but at Britain as well, who was seen as having Southern sympathies. But when news reached Britain of the men’s capture, the reaction was opposite of the Americans’—everyone was outraged, particularly since it wasn’t initially clear if this breach of Britain’s neutrality was done with the sanction of the U.S. government.
Tensions escalated until soon both sides were talking about the possibility of war. To show the United States its breach of Britain’s neutrality had been serious, Britain ordered thousands of troops to sail to Canada and sent the Americans a dispatch (via the British minister to the United States) that implied repercussions unless the U.S. government apologized and released Mason, Slidell, and the secretaries.
After two days of meetings, on December 25 and 26, Secretary of State William Seward convinced Lincoln and his cabinet to agree to release the four Confederates from prison. So on January 1, Mason and Slidell were allowed to resume their journey to Europe, thus averting the threat of war.
For the full official correspondence regarding the Trent Affair, see Fold3’s Official Records of the Union and Confederate Navies, series 1, volume 1, pages 129–202. Or search Fold3 for other people and topics that interest you.