In 1865, the American Civil War was in its closing stages. On the 26th of January the Confederate Steamship Shenandoah sailed into Port Phillip and dropped anchor in Hobson’s Bay. The ship was the third of three raiding ships whose mission was to disrupt the mercantile shipping of the Northern Union in the Pacific ocean and to overcome the Union’s blockade of the ports of the Confederate states. The Shenandoah was built in Liverpool, designed for speed, manoeuvrability and surprise, and it was equipped with the latest weaponry. However, it had sustained damage to its hull in a storm, and its Captain, James Waddell, was intent on securing repairs and also on purchasing provisions, and engaging additional crew.
As a British Colony, Victoria was expected to enforce Britain’s official policy of neutrality in the conflict. Yet public opinion amongst the influential classes in Victoria was with the Confederate cause, and despite its officially neutral stance, Britain was surreptitiously supporting the South. A key component in Victoria’s naval defence was HMCSS Victoria, a vessel with half the displacement of the Shenandoah, with less modern armaments and with a crew that were less practised in the art of war. The Victorian Governor, Sir Charles Darling, and his Government faced a dilemma. Darling sought the advice of the Attorney General, George Higinbotham who advised him to decline the demand of the United States Consul to impound the Shenandoah.
By charm, deception and political shrewdness Captain Waddell eventually achieved all of his aims in Victoria. The Shenandoah’s hull was repaired, it took on supplies and engaged 42 crew members, (despite Waddell’s undertaking to the Victorian authorities that he would not do so), and departed from Port Phillip for the North Pacific where it continued to attack Union shipping. Despite the fact that the British Government at the time approved the Victorian response, the matter had unforeseen implications. In May 1871, an international tribunal decided that Britain was culpable in the destruction of Union shipping through its support for the three Confederate raiding vessels, including the Shenandoah. Britain was required to pay $US.15,500,000 in damages. Higinbotham faced the accusation that his advice to the to the Governor had cost Britain dearly.