On December 7, 1863, a group of Confederates seized the ship Chesapeake making a run between New York and Portland. They reached British territorial waters near the coasts of New Brunswick and Nova Scotia. They wanted to sell the ship's cargo in the Maritimes, buy arms and convert her into a privateer to attack the merchant ships of the North.
On December 16, in St. Margaret's Bay in Nova Scotia, two Northern warships captured the Chesapeake. Also, in British territorial waters, the Americans searched a little Nova Scotia boat, the Investigator, looking for fugitives. British neutrality had been violated by both the Confederates and the Northerners.
Although there were no serious consequences, the incident showed the British colonies that the South would try to use the Maritimes and Canada as a base for operations against the North.