The southern states saw the most military action in 1780, but one crucial development in New York sent shock waves through the Continental army.

Benedict Arnold was one of the Continental army's most effective battlefield commanders. He had helped capture Ticonderoga and led an assault on Quebec. He had contained Carleton's invasion down Lake Champlain in 1776. The following year, he played a heroic part in the great victory at Saratoga. Like many American officers, Arnold did not believe that Congress had bestowed on him sufficient recognition and reward. This conviction would fester into something dangerous.

Congress promoted Arnold to the rank of brigadier general after his campaign against Quebec in 1775, but he was passed over for another promotion in February 1777. Arnold was angered to see lesser men advanced before him because they had more political clout in Congress. Taking this as a grievous insult, he resigned his commission. Washington valued Arnold's military abilities, and the Commander in Chief saw to it that Arnold obtained the rank of major general and re-entered the army. This happened in time for Arnold to play a leading role in the Saratoga campaign.

Arnold was badly wounded in the hip at the Battle of Bemis Heights, and his convalescence was protracted. Because Arnold was unfit for field service, Washington appointed him military commander of Philadelphia in 1778. Temptations abounded in a place that no longer merited its title as the city of “brotherly love.” Arnold set himself up in a mansion that had been owned by the Penn family and began leading a lifestyle far too extravagant for his military salary. Arnold was suspected of shady business dealings with contacts in New York City and was accused of pocketing and selling confiscated loyalist property. Feelings ran high against the loyalists who had fraternized with the enemy during the British occupation. Arnold openly socialized with loyalist sympathizers and courted and married Peggy Shippen, the beautiful eighteen-year-old daughter of a former British official who had entertained British officers.

Congress investigated the charges of malfeasance leveled against Arnold. This infuriated the general. Fueling his anger — and also his peculations — was the failure of Congress to forward him his back pay. Arnold grew increasingly dubious of the prospects of a country headed by the politicians he had come to despise. He also later claimed to be deeply offended by the alliance with Roman Catholic France — as he saw it, a deal with the devil on both religious and strategic terms.

Soon after his marriage in 1779, Arnold contacted the British. A long correspondence ensued as Arnold bargained with Major John Andre, an aide to General Clinton. The turncoat American wanted a large sum of money and a high-ranking commission in the British army. Andre and Clinton were not certain that Arnold was worth the price. During these negotiations, Arnold and his wife began providing intelligence to the British for smaller sums. What finally clinched the deal was Arnold's offer to surrender West Point to Clinton. For this valuable prize, he was promised £20,000.

Washington had hoped to return Arnold to the field in 1780, offering him the command of the left wing of his army. He was surprised when Arnold pleaded a slow recovery from his wound and asked for command of the Hudson River Highlands, which included the strategically vital American position at West Point. Arnold received this posting in August. The following month, he tried to arrange for the kidnapping of George Washington while the Commander in Chief was on the road to a meeting. Only an error in timing foiled his plan.

A few days later, American militia captured Major John Andre in civilian clothes, with the plans of West Point in his stocking. Word reached Arnold, and he immediately fled to the shelter of a British warship on the Hudson. Washington arrived at West Point on September 25. Here he examined the captured papers, which provided irrefutable proof that Arnold was a traitor. He found the revelation devastating. “Arnold has betrayed me,” he is reported to have lamented. “Whom can we trust now?”

Washington responded with cold fury to Arnold's plot, which might have resulted in his own capture as well as a major blow to the American cause. He longed to see “Arnold in Gibbets,” and sent an agent to New York City in an abortive attempt to kidnap or assassinate the turncoat. Despite General Clinton's protests, the unfortunate John Andre was hanged as a spy, meeting his death with great gallantry. Reviled by his countrymen and unloved by the British whom he now served, Arnold was made a brigadier general and given less money than he thought he deserved. The once-celebrated hero lived to see his name become a byword for treachery.