On July 1st, the United States gets a new Treasury Secretary as William Pitt Fessenden is appointed by President Lincoln and immediately confirmed. Fessenden, a Senator, replaced Salmon Chase who resigned following the failure of a loan offer to the government to receive any acceptable bids. Without the ability to borrow money, the entire war effort was in jeopardy.
On that same day, the Senate approved the Wade-Davis Reconstruction Bill, which Lincoln subjected to a pocket veto.
In Georgia, Confederate Joe Johnston ordered his forces to fall back from the Kennesaw Mountain position to a new position along the Smyrna Line on July 2nd. Also on the 2nd, the U.S. Senate granted a charter to the Northern Pacific Railroad.
July 4th saw Johnston retreat again, this time to the Chattahoochee Line.
Newspaper publisher Horace Greeley received a letter on July 5th containing a Confederate proposal for peace negotiations to be held in Canada. Greeley forwarded the letter to President Lincoln.
On that same day, Confederate General Jubal Early crossed the Potomac River at Harper's Ferry and entered Maryland with his division. He turned his force eastward towards Washington.
Union commanders, having heard of Early's movement, begin the recall of troops to defend the capital.
The Union Army of the Ohio under General John Schofield crossed the Chattahoochee River in Georgia at Soap Creek on July 8th.
Following some cavalry skirmishes on the 7th and 8th, Union troops under General Lew Wallace attempted to stop Early's march on Washington on July 9th at Monocacy Creek in Maryland. The outnumbered Yanks were defeated after Early turned Wallace's flank.
On the 11th, Early reaches the suburbs of Washington, but he lost a day's march at Monocacy, which enabled the Union Army to reposition 20,000 troops to stand between Early and Washington. Early was halted at the strongly-armed Ft. Stevens, near modern-day 13th Street and Georgia Avenue. He could see the capitol through his spyglass, but his army was spread out and exhausted after the long march in the heat and humidity. After considering his position, he withdrew towards the Potomac, crossing near Leesburg on the 14th. After a 2-day rest, his division returned to the Shenandoah Valley.
Meanwhile, in Tennessee, Union General A. J. Smith repulsed repeated attacks, but running short of supplies, he was forced to withdraw to Memphis on July 14th.
After a series of retreats, Joe Johnston was relieved of his command and replaced by John Bell Hood. on July 17th.
On July 18th, Horace Greeley was sent to Canada by President Lincoln, who gave the newspaperman broad powers to reach a settlement. Lincoln's only requirements were a restoration of the union and a renunciation of slavery. Confederate representatives rejected the conditions.
Moving immediately to the offensive, John Bell Hood attacked Union forces under George Thomas at Peachtree Creek on July 20th. However, he was unable to punch through the Union lines and was defeated.
On July 22nd, Hood attacked once again in an action called the Battle of Atlanta. Confederate forces under Hardee and Cheatham hit Union General McPherson's line north of Atlanta. McPherson was killed in action, but the Union prevailed. While the victory did not result in the Union possession of Atlanta, it did allow Sherman to set up a siege of the city which lasted until September.
At Kernstown, Virginia on the 24th, Union General George Crook briefly blocked Jubal Early's retreat to the Shenandoah. The block was broken after a violent attack on the Union left by Confederate General John Breckinridge which broke the Union line, forcing the soldiers back to Harper's Ferry.
July 26th saw the appointment of General Oliver Howard to the command of the Union Army of the Tennessee by William T. Sherman.
Union cavalry under George Stoneman leave Kennesaw Mountain to raid Macon, Georgia.
July 28th saw the Battle of Ezra Church, part of the Atlanta Campaign. Sherman, his troops arrayed in a U-shaped position above Atlanta, sent Howard's force around the east to cut off the vital rail supply line leading to Macon. Hood, anticipating the move, deployed his troops to block Howard. But Howard had arrived first, and engaged Hood's troops from prepared positions near a chapel called Ezra Church. In the ensuing action, Hood was defeated, but managed to keep Howard away from the vital rail line.
Two days later, one of the most imaginative actions occurred as part of the Petersburg siege, south of Richmond. Union miners dug a 586-foot tunnel under the Confederate position and packed it full of 8,000 pounds of powder. But the plan, which called for an assault by a regiment of black troops, was changed by General Grant who had doubts about the troop's ability to carry out the attack. Also, he was very concerned about the fate of those who might be captured by the Southerners. The assignment was given to a white regiment, even though the black troops had thoroughly trained to exploit the breakthrough by going around the crater to assault the Confederate lines. The replacement unit was given cursory instructions. On the day of the attack, the fuse was lighted, but died about halfway in. One of the miners, in a brave act, went into the mine, even though nobody knew at that time what the state of the fuse was. He found the break, relighted the fuse and dashed from the tunnel. The blast was everything the Yanks had hoped for, blowing a huge crater in the fortified line. But the replacement regiment, instead of going around the edge of the crater, charged right into the hole. The Confederates, who recovered with remarkable alacrity, simply had to fire down into the hole, slaughtering the Union soldiers. The break in the line was repaired. The attack was a failure.
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