As the new year opened, General Robert E. Lee clung doggedly to his position defending Richmond, conscious that world opinion had come to regard the fate of the Confederacy as inseparable from that of its capital city. Equally determined that Richmond should fall, General Ulysses S. Grant, with great superiority in numbers, pressed against Petersburg, the key to the capital's southern defense line. Grant also sought to break through to the westward, encircling Lee and Richmond, and cutting the Weldon, Southside (Lynchburg), and Danville railroads by which the city and the soldiers were supplied.
That Grant lay in front of Petersburg and less than 20 miles from Richmond was wholly due to Federal naval control of the James and Potomac Rivers. His waterborne line of supply extended up the James to City Point, only seven miles from Petersburg. From this principal base at City Point, Grant coordinated the joint movements of the Army of the Potomac and the Army of the James.
In Richmond, the prospect of a naval attack was so threatening that the government assembled for the city's defense the strongest naval force it ever placed under one command. The James River Squadron, commanded by Flag Officer John K. Mitchell, consisted of three ironclads, seven gunboats, and two torpedo boats. In addition to its defensive functions, Mitchell's squadron also constituted a potentially formidable threat to the security of the vital City Point base. It operated behind a protective minefield at Chaffin's Bluff, some 35 miles upriver from City Point.
To counter Mitchell's warships and protect Grant's waterborne supply line, the Fifth Division of the North Atlantic Blockading Squadron lay on the James guarding the sunken hulk obstruction line at Trent's Reach and the pontoon crossings of the James and Appomattox Rivers and protecting supply vessels against sharpshooters and hidden batteries on shore. Normally the Fifth Division consisted of five monitors and some 25 gunboats. However, in January four of the monitors and a number of the gunboats were away from the James with the fleet being assembled by Rear Admiral David D. Porter for the second attack on Fort Fisher. Hence the Confeder-ate squadron above City Point enjoyed an unprecedented opportunity for offensive operations on which it sought to capitalize before the month ended.
Receiving General Grant's 30 December notification of a renewed Army assault by sea on Fort Fisher with an "increased force and without the former commander [General Benjamin F. Butler]", Rear Admiral Porter acted vigorously to set up a massive and overwhelming attack behind the fleet's heavy guns. He directed that his 43 warships concentrated at Beaufort, North Carolina, and the 23 on station off the Cape Fear River send in their operations charts for corrections and onload "every shell that can he carried" for shore bombardment. Porter replied immediately to the Army commander-in-chief: ". . . thank God we are not to leave here with so easy a victory at hand. . . ." He assured his old Vicksburg colleague that he would "work day and night to be ready." At Fort Fisher, mindful of General Lee's message that the work must be held at all costs or the Army of Northern Virginia could not be supplied, Colonel William Lamb and his garrison readied themselves for the further attacks forecast by the sizeable Federal naval force which had remained off the Cape Fear River entrances since the first attempt to take the fort had been broken off.
On the James River, Commander William A. Parker, commanding the double-turreted monitor Onondaga, reported that 12,000 pounds of gunpowder had been detonated in an effort to remove the end barriers of the canal excavation at Dutch Gap, Virginia. "The earth was thrown up into the air about 40 or 50 feet," he noted, "and immediately fell back into its original place. This earth will have to be removed to render the canal passable for vessels." Major General Butler had begun the canal in 1864 with a view to passing Confederate obstructions above Trent's Reach. If the passage had been effected, Butler's Army of the James could have bypassed key positions in Richmond's southern defense system and moved on the city in a diversionary threat aimed at reducing General Lee's resistance to the main Union thrust under General Grant.