At the time of the American Civil War (1861–1865), Canada did not yet exist as a federated nation. Instead, British North America consisted of the Province of Canada and the separate colonies of Newfoundland, New Brunswick, Prince Edward Island, Nova Scotia, British Columbia and Vancouver Island, as well as a crown territory administered by the Hudson's Bay Company called Rupert's Land. Britain and its colonies were officially neutral for the duration of the war. Despite this, tensions between Britain and the United States were high due to incidents such as the Trent Affair, blockade runners loaded with British arms supplies bound for the Confederacy, and the Confederate Navy commissioning of the CSS Alabama from Britain.

Arms trafficking or gunrunning is the illicit trade of contraband small arms, explosives, and ammunition, which constitutes part of a broad range of illegal activities often associated with transnational criminal organizations. The illegal trade of small arms, unlike other organized crime commodities, is more closely associated with exercising power in communities instead of achieving economic gain. Scholars estimate illegal arms transactions amount to over US$1 billion annually.