In December 1776 some on the British side believed that the war was all but won. Admiral Howe's secretary wrote that “the Heart of the Rebellion is now really broken.” The Howes offered a pardon to any rebels in New Jersey who took an oath of loyalty to the King, and many availed themselves of the opportunity. During the winter lull, generals Burgoyne and Clinton traveled home to politick for promotions. By the end of December, General Cornwallis was also packing his bags for England. Comfortable in New York City, Howe enjoyed the fruits of victory. Recently knighted for his successes, he dallied with a pretty blonde and blue-eyed mistress and pondered plans to recover more territory for the Crown in 1777.

The military situation did not look promising for the Americans. The British had conquered the cities of New York and Newport and the state of New Jersey. Philadelphia lay only thirty miles away from their nearest out-posts. Few believed that Washington's army could successfully defend the city; it was not clear that his army could defend itself. As one officer wrote, “Such is now the gloomy aspect of our affairs that … strong apprehensions are entertained that the British will soon have it in their power to vanquish the whole remains of the continental army.”

Martial law was declared in Philadelphia. Panic took hold in the city. Many Patriot families in Philadelphia began moving their household goods to the security of the country. Congress gave George Washington emergency powers to direct the war effort for a period of six months and removed itself to Baltimore “amid the jeers of tories and the maledictions of Patriots.”

By the time Washington's army reached the temporary security of Pennsylvania, it was a shadow of the force that had gathered to defend New York City. Washington had fewer than 5,000 men to guard a thirty-mile front along the Delaware River. Had the British been more enterprising, they could have easily constructed transports from the wood stored in Trenton's lumberyards and crossed over to Pennsylvania. The Americans would have been nearly powerless to stop them. The condition of Washington's troops was deplorable. The army was wracked by sickness. After a long, wearing campaign, the men were ill-prepared for the winter, “many of 'em being entirely naked,” according to their commander, “and most so thinly clad as to be unfit for service.”

Militia made up half of Washington's force. These amateur soldiers were notoriously unreliable, most of them having no military experience. The terms of enlistment of many of Washington's troops were drawing to a close. Given the state of the army, it was too much to expect that many of these men would volunteer to stay on. At the end of the year, Washington would be left with only 1,400 Continental troops.