During the final two months of 1776, privateers were successfully cruising, State Navy activity was much in evidence and some of the Continental naval vessels were at sea. John Paul Jones in the Alfred accompanied by the sloop Providence, Captain Hoysteed Hacker, took a rich prize. She was the Mellish with a cargo of thousands of uniforms including "every article complete for a Soldier from the hat, to the shoes." In the West Indies Andrew Doria exchanged gun salutes with the fort at the Dutch island of St. Eustatius. This recognition accorded the rebel flag generated a flurry of British protests. Returning to the northward, Andrew Doria engaged and captured H.M. sloop Racehorse. The Continental brig Lexington was taken by H.M.S. Pearl off the Delaware capes.

A sizeable convoy of British transports weighed anchor from New York and set course for England. Since the destination and "design of the Enemy" were unknown to the Americas, shock waves moved along the coast in anticipation of where the next blow might fall. Conversely, anxiety ran high in Nova Scotia where invasion from New England was expected.

Early in December a British Army-Navy expedition sailed from New York and easily took Newport, Rhode Island, and command of surrounding waters. Upon the approach of this formidable enemy force, the Continental ships in the area under Commodore Hopkins fled up the Providence River.

Washington's army was forced out of New York and retreated southward through New Jersey with the British in pursuit. Fear that Philadelphia would soon be occupied prompted Congress to remove to Baltimore. Robert Morris, writing to Silas Deane near the close of 1776, but before Washington struck back at Trenton, could with reason note that the "unfortunate turn of American Affairs, leaves no room for joy in the mind of any true friend of our country."